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Africa’s ICT Infrastructure
Table 4.3 Details of Syndicated Loans to Telecommunications Borrowers in 2006 Celtel Zambia Amount Currency ($ million) Tranches (number) Maturity (years) Pricing (basis points) Local banks Developing country banks Developed country banks
Safaricom, Kenya
Vodacom Group of South Africa
MTN Limited of South Africa
105 Local and U.S.
165 Local
1,138 Local
3,468 Local and U.S.
2 5 —
1 5 —
3 3–5 LIBOR + 60–90
2 2 (South Africa)
3 5 91-day T bill + 100 4 1 (South Africa)
4 0
2 1 (China)
4
4
1 (Germany)
15
Source: Irving and Manroth 2009. Note: — = not available; LIBOR = London Interbank Offered Rate.
investments in its businesses in other African countries. In 2006, MTN raised $3.9 billion in commercial loans to finance its $5.5 billion acquisition of Investcom, a Lebanon-based operator with businesses across Africa. A year later, MTN raised a further $1.6 billion in commercial debt financing for investment in its Nigerian business. Most of the major African telecommunications operators are controlled by companies based in developing countries, but the financing that they have used to invest has tended to come from higher-income countries (figure 4.6). European lenders, in particular, dominated the supply of debt finance over the period 2005–09. This is likely due both to the historical links between Europe’s banking sector and Sub-Saharan Africa and to the links between many of the sponsors and European financial institutions. North America, the Middle East, and East Asia have also provided significant financing to the sector. The recent entry of Asian companies into the African telecommunications market may reduce Europe’s dominant position, and new sources of debt financing may emerge. By comparison, the financial sector in Africa is relatively underdeveloped, and, as a result, African countries have played a less significant role in providing debt financing, despite their importance as project sponsors (figure 4.6).