allAfrica.com: Nigeria: With $2 Billon, We'll Improve on Our QoS

MTN Nigeria Communications, the leading mobile provider in Nigeria last Wednesday caused the biggest move in an already charged industry with a $2 billion loan syndication involving 14 local and foreign banks.

Described by Mr. Ahmad Farroukh, CEO, MTN Nigeria as the "biggest by a single telecommunications company anywhere in Africa," the loan syndication would enable the mobile provider to expand on existing infrastructure, and build on new transmission facilities to meet growing demands.

"We would use the additional funds to perfect our quality of service (QoS) to prove we're not just successful, but care about Nigeria," said Farroukh, at a post event medial briefing held at the Eko Hotels & Suites, Lagos. The issue of dwindling QoS has recently become a matter of national discuss with the House of Representatives mandating it's Committee on Telecom to investigate activities of both the operators and regulator - Nigeria Communications Commission (NCC).

According to Farroukh, the company has since winning the digital mobile licence in 2001, embarked on a "relentless investment drive in rolling out critical telecommunications infrastructure across Nigeria," with a transmission backbone comprising about "8,497 km of microwave radio and over 4,000 km of fibre optic transmission across Nigeria" making it the most extensive privately owned transmission infrastructure in Africa."

The NCC took up the burning issue of QoS tough with all three major operators in Nigeria recently. In a 20 September 2007 'Notice of Intention to issue direction to MTN Nigeria' by the Commission in Abuja, Felix Adeoye, Secretary of NCC threatened that it would compel a compensation regime per month on the mobile provider.

According to Mr. Adeoye, the Commission would use a "Traffic Channel Congestion parameter' as key performance indication to charge the operator for offences related to poor QoS. The Commission says the punitive regime would take effect from October 1 and would compel MTN to pay between N50 - N175 as compensation to subscribers at the end of October 2007.

"The Compensation to subscribers for month ending October, 2007 shall be paid on or before November 7, while compensation for subsequent months shall be paid on or before 7th day of succeeding months after such compensation becomes due. Compensation shall be payable to subscribers by way of airtime credit and no limitation shall be placed by MTN on utilisation of such airtime credit," Adeoye wrote.

Industry analysts in Nigeria believe the new $2 billion loan syndication indicates a critical confidence vote on the MTN Group's Nigerian operation. "Today is momentous because for the first time ever in Africa, a local and international financial consortium is granting a facility of $2 billion to a single telecommunications network - MTN Nigeria. No individual telecommunications company in Africa has ever benefitted from a loan of such magnitude in a single tranche," said an elated Farroukh.

Confidence in Nigeria

Mr. Farroukh, believes the loan also represents measure of its confidence on the potentials of the Nigerian economy and its ability to absolve such facility. Its also an indication of the company's growth projection for the coming years. "We, at MTN, have significant confidence in Nigeria. Since winning the digital mobile licence in 2001, MTN has embarked on a relentless investment drive in rolling out critical telecommunications infrastructure across Nigeria. We continue to deploy a considerable number of base stations, mobile switching centres and base station controllers across the country. I must not forget to add our investment in power, as MTN generates in excess of 60MW of electricity to power its operations across the country."

"Globally, it is now an established fact that telecommunications is an essential driver of social and economic growth and development. We recognise this at MTN. And for this reason, our operation is driven by a passionate desire to spearhead the unleashing of Nigeria's enormous development potential. We are very proud of the modest contributions MTN continues to make towards fostering economic growth and development across Nigeria."

As part of the confidence building measures, the mobile network is also taking steps to get listed on the floor of the Nigerian Stock Exchange, (NSE) in Lagos. "As you know, the MTN Group is already listed in the Johannesburg Stock Exchange, and we have began the process to get listed on Nigerian Stock Exchange too."

Loan terms

Global co-ordinator of the project is the South African Standard Bank Group and its Nigerian subsidiary, IBTC Chartered Bank, PLC. Divided into three 'Facility' A, B & C; it comprising an international facility mandate led by Standard Bank, Commerzbank, China Construction, KfW, Nedbank, UBA, GT Bank and CitBank. The balance N205 billion was denominated in Naira.

The 'facility A' involves a N142.2 billion underitten medium term discounted note issuenace facility. It priced over 90 day NIBOR for the preceding 90 days, with a five years tenor. Repayments terms include '50 per cent bullet after three (3) years and 50 per cent final repayment in the 5th year'.

The 'facility B' involves a N63.8 billion revolving medium term discounted note issuance facility is priced over the 'relevant NIBOR rate for the preceding period', with five (5) years tenor. Repayment starts "five years from the date of the Note issuance and revolving credit facility agreement.' The 'facility C' is a $400 million 'term loan' priced over 180 day LIBOR with a five years tenor. Repayment carries '18 months capital grace, thereafter eight (8) equal semi-annual installments'.

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