Loan to help telco finance its bid for Saudi Arabia's 3rd mobile licence and boost presence in Africa
Telecom giant Mobile Telecommunication Co (MTC) signed $4 billion syndication loan that will help finance its foray into Saudi and boost its presence on the African continent.
MTC signed a $4 billion credit facility Wednesday, the biggest ever corporate loan in Kuwait and the second largest in the GCC. 39 lenders from 16 countries participated, including ABN AMRO Bank, Arab Banking Corporation, State Bank of India and Mizuho Bank.
The book runners BNP Paribas, Calyon, Credit Suisse, and UBS hit the market in May of this year. NBK Capital was the financial advisor for the deal.
Acquisition
Managing director Dr Saad Al Barrak said the $4 billion credit facilities will be used to finance MTC's future acquisition and general corporate needs.
This includes financing the bid for the license for Saudi's third mobile operator, and to look for investment in five other African countries including South Africa.
The company is also applying to extend its mobile license in Iraq. Its current three year license expired recently, and it now seeks a long-term license of fifteen years.
"We are on the same plan we have three years ago, to be a global company. We will use the credit line to finance new transaction in several countries: we plan of getting the third license in Saudi, and applying for the extension of the license in Iraq," he told reporters.
MTC currently has 2.5 million customers in Iraq. Its main expansion will be in Africa, however.
"Africa is our promise land - we are a leader in Africa and we will continue to be that," said Al Barrak.
"We are already in 15 countries, and we are targeting the top 20 economies in Africa in the next two years.
We plan to go to Angola, Senegal, Ghana, Ethiopia, and South Africa."
The company's remarkable customer growth is primarily driven by its African operations. African customers excluding Sudan make up some 62 percent of its 22.9 million customer base. The number of customers rose by one a half time the past one year.
MTC acquired the other 61 percent shares it did not own in Mobitel Sudan last February, and bought 65 percent of mobile in Nigeria in May.
The company reported KD 139.3 million net income for the first half of this year, on the back of 121 percent higher revenues of KD 501.3 million.
"MTC is not just a Kuwaiti company, it's got one of the best networks in Africa, and the management has a proven track record,"
"This transaction will give them a treasure chest, so that they don't have to go out to market every time to finance projects," said Dale Summerville, managing director of Calyon Corporate and Investment Bank, one of the deal's book runners and lead arrangers.
Summerville said apart from financing, this facility will also allow MTC to consolidate its existing loans and convert them into a longer term credit. He expects MTC, now is in their second phase of its 3x3x3 expansion plan, to consolidate its Middle East and African businesses.
The deal is a revolving bridge syndication, meaning that the margin will go up and down according to the company's performance. It is priced at 85 points above LIBOR, said Summerville.
"The pricing starts at 85 points out of the box, which is generous for a company like MTC," he said
Apart from the book runners, eight banks and financial institution joined the syndication at mandated lead arranger level, each with commitment of $200 million. Lead arrangers meanwhile commit to $100 million, five lenders at arrangers level commit $50 million, and the 14 co-arrangers have commitment of $35 million or less.
Meanwhile, NBK's CEO Ibrahim Dabdoub, who was also there at the ceremony, said he expects a positive second half for the banking industry.
"For NBK, we will do as well as we did in the first half, if not better. There's no reason now for us not to," he said.
"Our business has always been steady, underlined by the hard core cash flow, and not dependent on the situation in the market. I think the outlook is the same for the other banks in the Kuwai."
NBK reported net profit of $447 million (KD 129 million) from January to June, 32 percent up from the year before. The bank also reported an improvement in return on average assets to 4.1 percent and return on beginning equity to 39.7 percent.
Dabdoub also said NBK is eyeing expansion in the Gulf region mainly. Several negotiations are on the table, but he declined to disclose further. In the last two years, NBK acquired a 20 percent stake in the International Bank of Qatar and a 75 percent controlling share in Credit Bank of Iraq. It also set up new operations in Jordan, Saudi Arabia and China (Shanghai).
RTRS adds: "We will bid for licences in Iraq and Saudi Arabia," Assad Al-Banwan told reporters.
Saudi Arabia plans to licence a third mobile operator in 2007.
Iraq, where MTC operates through its MTC Atheer joint venture, is calling for tenders to replace three licences that have expired.
"In Iraq there are three operators and now a tender is being floated for long term licences," MTC chief executive Saad Al Barrak told reporters. "The licence has expired for all companies and every company is required to re-bid. The competition is tough."
He also said the company would seek to enter five new African markets.
MTC, which also has operations in Jordan, Bahrain and Lebanon, bought Celtel, Africa's third-largest operator, for $3.4 billion last year.
"We will continue to be leaders in Africa," he said. "We are in fifteen countries and we plan to increase that to 20 countries by entering Angola, Senegal, Ethiopia, South Africa, and Ghana."
MTC is one of several Gulf Arab telecom firms that are pushing aggressively into markets outside the world's top energy exporting region.
© Arab Times 2006
