Telecommunications giant, MTN Nigeria has signed a loan deal worth N200 billion in Lagos. The seven-year medium-term facility loan deal which was facilitated by a posse of local financial institutions was signed at the office the foremost commercial law firm Aluko & Oyebode in Ikoyi, Lagos Island.
The loan which is said to be channelled towards the company’s capital expenditure is denominated in Naira and is expected to be repaid within seven years. The event was attended by many industry players, top officials from the telecommunication companies, stakeholders in the financial sector and officials of the participating banks.
A total of twelve local banks facilitated the loan deals. Some of the banks are; Diamond Bank Plc, Ecobank Nigeria Plc, Fidelity Bank Plc, First Bank of Nigeria Plc, First City Monument Bank (FCMB) Limited, and United Bank for Africa (UBA) Plc.
According to top officials of the telecommunication giant, the loan which has a two-year moratorium and a five-year repayment plan will help MTN Nigeria scale up it services and also add more customers to its network of 55 million users. “The signing of this loan facility is a major landmark in our expansion programme in which we are making significant investments,” said Ferdi Moolman, MTN Nigeria, Chief Executive Officer after the signing of the loan deal in Lagos on Wednesday.
Hit or miss?
This new development is coming in the middle of a hot debate over MTN Nigeria’s planned floating at the floor of the Securities Exchange Commision. It might also lead to discussions among stakeholders and financial analysts regarding the possibility of the Africa telecommunications behemoth going public in 2018. Last week security regulators revealed that MTN Nigeria is yet to file an application for IPO (Initial Public Offerings). This sparked arguments over its enlistment on the floor of the Stock Exchange market.
MTN Nigeria’s plan to restructure debts and target local investments is relatively weighed down by the $1 billion fine slammed on it by the Nigerian Communications Commission for going against certain communication regulations in the country. The company’s float plan was dangled in 2017 after continuous anxiety over Nigeria’s rippling economy. With 2018 winding up, the hope of many potential investors has dwindled as MTN Nigeria is yet to make an official statement about its IPO.
The company still has until 2019 to pay off a loan ($3 billion) it took from a consortium of local and international banks in 2013, coupled with a balance of N150 billion (from its fine), the company might be adding more to its debt coffers as it keeps expanding operations. MTN Nigeria’s $1billion fine led its parent organisation MTN Group to announce a cut in its 2018 dividend as a means of cutting debt. MTN Group CFO told Bloomberg in May that the company plans to raise as much as possible in local currency to offset its debts.
While plans on future expansion, including improved internet service and 5G connectivity, currently top the company’s list, analysts have argued that the company might not be able to clear off its debt with the Nigerian Communications Commission before the end of 2018. However, MTN has paid over 50 percent of the fine slammed on the company by NCC, with more than $500 million debt, MTN might be adding up to it if strict measures are not taken.
It will be recalled that the country’s fourth largest telecom operator of about 21 million customers, Etisalat was forced out of business in 2017 after the company failed to repay a loan of over N541bn which was facilitated by some Nigerian and international financial institutions in 2015.