Monday, Jul 04, 2011

Gulf News

Dubai: Du, the UAEs second largest telecoms provider by market value, has repaid a Dh3 billion dual currency syndicated loan facility, the company said yesterday.

The loan, which was due for repayment on June 30, has been repaid to the syndicate of 16 banks, using a combination of existing financing facilities and cash, du said in a statement to the Dubai Financial Market.

We are pleased to be in a such a strong position to repay this facility using the most efficient resources available to our company, said Osman Sultan, dus chief executive officer.

We continue to strengthen our financial and operating position through this well-defined financing and executed strategy, he added.

The Dh3 billion medium term strategic financing arrangement was dus debut debt offering in 2008. The telco says the loan enabled the company to roll out its network infrastructure at a faster pace whilst helping it to put in place increased capacity.

Debt facility

Du secured a three-year debt facility last month to help repay the June 30 loan as well as provide extra cash for capital expenditure.

The $220 million (Dh808.1 million) club financing deal involves du paying annual interest of 1.45 per cent over Libor (London Interbank Offered Rate).

Refinancing debt at a lower rate could ease some pressure from the bottom-line while investments in the network infrastructure will help expand addressable market and open new opportunities for revenue generation, said Hassan Sandila, a telecommunications analyst at IDC Middle East, Turkey and Africa.

This capital optimisation programme will help du reduce its debt burden and have a positive impact on its capital structure. Thus, allowing du to secure better financing deals in the near future to further strengthen its coverage and market position, he added.

Du shares rose 2.89 per cent to a two-week high of Dh3.20, its highest close since June 20, on the Dubai Financial Market yesterday.

Earlier this year, the company said it had more than doubled its first quarter profit to Dh205.8 million after paying a 50 per cent royalty fee to the Government.

By Kevin Scott, Staff Reporter

Gulf News 2011. All rights reserved.