Smile closes financing for African 4G LTE network expansion

Smile Telecoms Holdings is injecting US$365 million of debt and equity financing into expanding its 4G LTE mobile broadband networks and services across Africa.

The operator provides mobile wireless 4G LTE broadband networks in the 800MHz band in Nigeria, Tanzania and Uganda. It aims to use the funding to extend its national coverage to match the largest 3G network in each of its current countries of operation by the end of 2015. It will also launch a broadband network in Democratic Republic of Congo early in 2016.

The funding is comprised of US$50 million of equity, raised from the Public Investment Corporation on behalf of Government Employees Pension Fund (PIC), and a US$315 million multi-tranche, multi-jurisdictional debt facility led by African Export-Import Bank with participation from the Development Bank of Southern Africa, Diamond Bank PLC, Ecobank Nigeria, the PIC, the Industrial Development Corporation of South Africa Limited and Standard Chartered Bank.

Under the terms, the funding will be used to accelerate national network roll-out, including equipment and services provided by Alcatel-Lucent and Ericsson, a full MPLS (Multiprotocol Label Switching) network, a London Point of Presence and expanded international backhaul services, and to fund operational expenditure and working capital.

Smile is aiming to provide over 300 million potential customers in its four countries of operation with a fast, reliable and high quality platform to accelerate development and wealth creation. There is persuasive evidence linking broadband to job creation; the Brookings Institution states that "for every one percentage point increase in broadband penetration, employment is projected to increase by 0.2 to 0.3% per year.” Furthermore, according to the Broadband Strategies Handbook by The World Bank, “a 10% increase in the penetration rate of broadband in developing countries is associated with a 1.4% increase in GDP per capita.”

Irene Charnley, Chief Executive Officer of Smile, said, “Now that we are fully funded to deliver national coverage of unrivalled super-fast internet access and clear voice services, our priority is to ensure that our customers experience and benefit from the power of high speed mobile broadband compared to the narrowband services available to date, including how to effectively manage the superior experience in terms of data consumption.”

Sheikh Mohammed Sharbatly, Deputy Chairman of Smile, said, “By licensing 800MHz spectrum for commercial use at an early stage relative to many other countries, including high-income ones, the governments of Nigeria, Tanzania, Uganda and the DRC have each demonstrated commitment to be at the forefront of the broadband revolution and to accelerate development and GDP growth.”

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