MTN Rwanda, the country’s largest mobile operator announced on Monday that it has acquired Rwf10b in form of a syndicated loan from seven local banks to upgrade its network.
The loan, which is the first and biggest commercial transaction provided by a group of local lenders in Rwanda, was led by the Commercial Bank of Rwanda (BCR).
MTN Rwanda’s Chief Executive Officer (CEO), Khaled Mikkawi, said the money is a fraction of the $100m (Rwf56.7b) the mobile operator will invest in the Rwandan telecom industry this year alone. Last year MTN Rwanda invested an estimated $60m (Rwf34.1b).
The company is installing more towers, purchasing new equipment and expanding stores in order to guard its market share as competition in Rwanda’s mobile space stiffens.
Six local banks including Kenya Commercial Bank, Ecobank Rwanda, Cogebanque, FINA Bank, Access Bank and the Development Bank of Kigali (BRD) where involved in the arrangement of the syndicated loan facility.
The loan facility attracts an interest rate of 15 percent and will be paid over a period of five years.
“ This is a very strong message to investors in the international community that even if we do not yet have a very first class national bank in the country, our banks can come together to support big investments in the country,” said François Kanimba , the Central Bank Governor, hailing the syndicate loan as a milestone to the country’s financial sector.
Kanimba noted that the arrangement is a step forward towards addressing challenges related to mobilising foreign direct investments in to the Country.
“This has been an issue raised so many times in different forums as the country tries to mobilise investments abroad,” he said, mentioning that giant investors refer to Rwanda’s banks as “very small” thus incapable of supporting big financial deals.
The Governor also said he was optimistic that more financial deals will come through to support investments in the country.
“I encourage banks to take more risks and invest significant amounts of money in such sectors which can support the real sector,” he said, urging banks to support investments in manufacturing and agro business.
At an event to unveil the loan facility, Sanjeev Anand, the Managing Director BCR, mentioned that MTN’s good track record as a profitable entity facilitated the transaction to be carried out successfully.
“This is the first proper syndication of this nature and size done in Rwanda. It will be a good message to our prospective investors in Rwanda as it reflects the advanced state of our debt capital markets,” he said.
Sanjeev also mentioned that the launch of the MTN syndicate loan marked the beginning of such financial products on the local debt market with anticipated diversification into other sectors.
“There is enough liquidity on this market to support such transactions. This good thing the transaction has done is to develop the local capability to conduct such transactions locally,” he said, pointing out that the transaction was executed and financed with local resources.