MTN turns to banks to raise Rwf50bn for network upgrade

MTN Rwanda chief executive Bart Hofker. File.

MTN Rwanda has approached local commercial banks about a Rwf50 billion loan for financing its operations and network expansion, The New Times has learned.

The telecom operator is already in talks with a consortium of eight unnamed local lenders over the possibility of securing investment capital to upgrade its infrastructure.


Bart Hofker, MTN Rwanda’s Chief Executive Officer, confirmed the telco’s intention to raise money from local lenders although he was tight-lipped on the amount.


Sources told The New Times that the operator is looking for Rwf50 billion to expand its mobile services as it looks for new revenue streams.


Hofker said the company is on a growth trajectory and it has embarked on an extensive capital expenditure investment programme for the coming years.

“To meet this capital expenditure programme we have the intention to go out into the local market and raise debt in local currency through a syndicated loan,” he confirmed.

Hofker said the move will transform the operator’s network and related infrastructure.

The New Times understands that the money the telecom operator is looking for is also still subject to approval by the company’s board, which is expected to meet this week.

The move comes at a time MTN is facing complaints regarding the network and competition from Airtel Rwanda, which recently merged with Tigo.

Latest statistics from Rwanda Utilities Regulatory Agency (RURA) show that MTN’s market was at 45 per cent with Airtel and Tigo controlling a combined 54 per cent. However, these numbers may include subscribers with SIM cards from both networks. 

According to the MTN CEO, Telco's should be evaluated based on revenue and not the number of SIM cards. 

MTN has almost double the internet subscribers. As of June 2018, MTN had over 3 million internet subscribers, while Tigo had 1.9 million and Airtel had just over 679,000. 

In 2017, MTN recorded a loss of Rwf985.2 million as a result of the Rwf7 billion fine by the regulator for non-compliance.

The company’s revenue, however, grew by 6 per cent year-on-year across all business lines during the same year.

This is not the first time MTN is raising such a big sum of money from local funders. In 2009, it acquired Rwf10 billion in a syndicated loan from seven local banks to upgrade its network.

The loan, which was the first and biggest commercial transaction provided by a group of local lenders in Rwanda, was led by I&M Bank (former Commercial Bank of Rwanda), Kenya Commercial Bank, Ecobank Rwanda, Cogebanque, FINA Bank, Access Bank and the Development Bank of Rwanda (BRD).

The facility attracted an interest rate of 15 per cent and was to be paid over a period of five years.

If successful, the latest borrowing will possibly be the biggest syndicated loan arranged by local lenders.

Kigali Marriott Hotel, Mt Meru Soyco factory, Imana Steel, and CIMERWA Cement, the country’s largest cement producer, are some of the other big firms that have so far benefitted from syndicated loans in the country.


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