Airtel Nigeria has signed a $138 million (N50 billion) five-year loan agreement with a number of Nigerian banks, Punch Newspaper has revealed.
The telecommunication company, which is set to list its shares on the Nigerian Stock Exchange by July 4 and its African unit on the London Stock Exchange, disclosed this in its offer prospectus.
It added that the loan agreement signed on June 17, 2019, the banks would allow it to make a repayment in five years and that they offered the company a two-year moratorium.
“Airtel Nigeria entered into a bank facility agreement for an amount of N50bn, which is available for a period of 180 days from the acceptance of the offer and has a tenure of five years inclusive of a twenty-four-month moratorium on the principal amount,” it said.
While the purpose of the facility was not stated, the Group described the telecom industry as a capital-intensive one that required substantial amounts of capital and other long-term expenditures.
According to Airtel, such expenditures are related to the development and acquisition of new networks and the expansion or improvement of existing networks.
It noted that the group’s capital expenditures were $630m, $411m and $395m in each of the years ended 31 March 2019, 2018 and 2017, respectively.
Airtel added that it had financed the expenditures in the past through a variety of means, including banking facilities, particularly at the operating company level, accessing debt capital markets, and to a lesser extent, through accessing equity capital markets.
Airtel, which is Nigeria’s third-largest telco, said it intended to use the net proceeds from its Initial Public Offer principally on the reduction of debt of $750m and achieve a targeted leverage ratio of 2.5x, based on underlying EBITDA for the year ended March 31, 2019.