Telkom has secured a $127 million (about R900 million) loan, which it will use in part for the expansion of its new mobile business, 8ta.
The syndicated loan, which is being offered by Sinosure, China's state-owned export credit agency, comes with a term of up to seven years.
Telkom unveiled the mobile arm of its business in October and revealed it expects to spend about R6 billion over five years to develop the necessary infrastructure for the mobile business to compete in the mobile market.
8ta has a five-year national roaming agreement with MTN SA, which gives it access to MTN's 2G and 3G network throughout SA. However, 8ta has a deal with networking company Huawei for the rollout and expansion of its own network and infrastructure.
Sinosure will in effect provide support for the financing of the contracts with Huawei.
Telkom says the loan is indicative of positive foreign investor confidence in the company.
“Telkom is continuously focusing on providing alternative and sufficient liquidity sources for the company, as well as focusing on its debt maturity profile,” it notes.
“An export credit agency (ECA) facility is an attractive and flexible financing option available to Telkom and will in future be considered as a funding alternative together with other financing considerations in the local and offshore markets.
“It gives Telkom the luxury and flexibility to ensure the most cost-effective financing for the company going forward,” concludes the company.
Barclays Capital, the investment banking division of Barclays Bank, was appointed as the ECA adviser and tender panel adviser for the arrangement. Absa Capital, the investment banking arm of Absa Bank, and Barclays Capital acted as joint coordinating mandated lead arrangers.
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