Wednesday, Oct 26, 2011
(Adds details Murabaha rate in the 5th and 6th paragraphs.)
RIYADH (Zawya Dow Jones)--Saudi Arabia's Etihad Etisalat Co. (7020.SA), better known as Mobily, said Wednesday it is in the process of concluding a 10 billion Saudi riyal ($2.7 billion) refinancing agreement with local banks.
The deal is aimed at refinancing the balance of a SAR10.78 billion long-term loan that Mobily obtained in 2007, a medium-term SAR1.5 billion loan it secured in 2009, and a short-term SAR1.2 billion loan secured in 2010, the telecommunications company said in a statement on the Saudi bourse's website.
Mobily said the refinancing arrangement will enable it to convert the loans into a long-term loan consisting of four tranches with terms ranging from five to seven years, and provide credit facilities of up to SAR10 billion in aggregate.
"The company believes that taking this proactive step at this time is better than taking it in the future, as it managed to get these refinance facilities at a competitive Murabaha rate," it said.
It added Mobily secured a competitive Murabaha rate of Saudi Arabia Interbank Offered Rate, or Saibor, plus 70 basis points for two tranches, and Saibor plus 65 basis points for the other two tranches.
In a Murabaha deal, a financier such as a bank buys a commodity and sells it to the customer at a higher price, in compliance with Islam's ban on interest.
Last week, Mobily, which is 27.4% owned by the U.A.E.'s Emirates Telecommunications Corp. (ETISALAT.AD), posted an 8% rise in third-quarter net profit on improved operational efficiency and higher data revenue, but the result missed analysts' expectations.
Major telecoms companies in the Middle East and North Africa have battled to increase earnings as intense domestic competition continues to erode voice revenue, with operators jostling to tap into the potential for mobile broadband and data services.
-By Summer Said, Dow Jones Newswires; +966-546-842373; summer.said@dowjones.com
(END) Dow Jones Newswires
26-10-11 1603GMT
