KUWAIT, 25 May 2005 — Kuwaiti telecoms operator MTC signed a one-year $2.4 billion debt deal with international banks yesterday to help finance its purchase of Dutch firm Celtel, which operates in Africa.
Mobile Telecommunications Co. (MTC) officials told a news conference that the four principal banks involved in the financing deal are UBS, Barclays, Credit Suisse and National Bank of Kuwait (NBK).
Each underwrote $600 million. Another 44 regional and international banks were also involved in the financing deal. “The bridge is considered the biggest facility in the Middle East and Gulf region for a privately-owned company,” MTC said in a statement.
MTC snapped up Celtel, which has operations in 13 African countries, for about $3.36 billion in March, saying it was keen to expand into fast-growing Africa from the Middle East. It bought 85 percent of Celtel immediately and will acquire the remaining 15 percent within two years.
The financing arranged yesterday was a syndicated bridge facility to be replaced by longer term financing later. “That will be the real financing,” said NBK Chief Executive Officer Ibrahim Dabdoub.
“It may be bonds, may be equity,” Dabdoub told Reuters. “We will offer them several formulas and they will choose but this (short-term) financing gives us breathing space for a year.”
The facility was significantly oversubscribed and generated demand totaling $3.5 billion. With the purchase of Celtel, MTC will have operations in 18 countries. MTC has said it will retain Celtel as a separate entity and keep its current management.
MTC’s Vice Chairman and Managing Director Saad Al-Barrak said Celtel would contribute to MTC’s earnings this year. “Celtel is now owned by MTC so its profits are unannounced, but we expect that it will contribute greatly to MTC earnings,” Barrak said. “Wait until the end of the year.”
Barrak said the 13 Sub-Saharan African countries where Celtel operates was a promising region with a total population of up to 250 million people and a very low cellular phone penetration rate of less than 5 percent.
With Celtel’s current 6 million subscribers, MTC’s total customer base now tops the 9 million user mark. He said MTC’s long-term plan was to increase this number to over 15 million by 2011, partly through expansion to reach 20 countries in Africa. “Africa and the administration of operations there will be handled by Celtel,” Barrak said.
MTC Chairman Asa’ad Al-Banwan said MTC — which has operations in Kuwait, Iraq, Jordan, Bahrain and Lebanon — was looking for other opportunities for growth. “Pakistan, Bangladesh, Turkey are all markets that we are studying,” Banwan said.