[dropcap]L[/dropcap]iquid Telecom, which recently concluded the R6.5bn acquisition of Johannesburg-headquartered Neotel, is raising US$700m (about R9bn) in long-term debt as it eyes further investment in network infrastructure in South Africa and elsewhere on the continent.
The pan-African telecommunications group, which is controlled by billionaire Zimbabwean businessman Strive Masiyiwa’s Econet Group, is issuing a $600m, five-year bond and is taking a new, $100m bank loan. Liquid Telecom is being advised by Standard Bank (lead adviser), with Standard Chartered and Citibank assisting.
The new fundraising round, which includes refinancing some of Liquid’s existing short- and long-term debt, comes after CEO Nic Rudnick revealed in an interview with TechCentral in February that the company intends spending billions of rand expanding Neotel’s data centres, wireless networks and fixed-line broadband infrastructure.
That includes a plan to take advantage of Neotel’s spectrum assets, Rudnick said at the time. Neotel is the only telecoms operator in South Africa with valuable “digital dividend” spectrum below 900MHz, and Rudnick has hinted that Liquid has big plans to exploit this frequency band in both urban and underserviced areas.
Rudnick said in an interview with TechCentral this week that Liquid Telecom’s revenue has more than doubled in the past 18 months on the back of strong organic growth and the contribution from Neotel. TechCentral can reveal that in the year ended 28 February 2017, Liquid had revenue of $594.6m and gross profit of $359.6m.
“We have reached the point where are very comfortable putting some long-term debt out into the market and removing any short-term debt that we have and giving us some funds for expansion,” he said.
He added that there are no immediate plans to seek a listing for Liquid Telecom. Econet’s Masiyiwa hinted previously that a listing on a European bourse was a possibility.
“The current objective is to refinance the group’s debt and provide funds for further expansion. The bond enables us to do that effectively, and that is currently the focus. However, we will continue to evaluate what the best sources of capital are, and we will make decisions accordingly,” he said.
“We are always looking at the best sources of capital, and the most appropriate capital structure. We will continue to look at all the options for raising capital effectively as the need arises.”
Liquid Telecom operates in more than a dozen African countries and employs 2 400 employees. The company finalised its acquisition of 70% of Neotel earlier this year after Vodacom, under regulatory pressure, previously failed to consummate a deal to buy the company. As part of the Neotel deal, Royal Bafokeng Holdings acquired the remaining 30% of the company not bought by Liquid, ensuring the company is empowered at an equity level. — © 2017 NewsCentral Media