Smile Telcoms Holdings has announced that it raised USD365 million of debt and equity financing that will be used to expand smile’s existing 4G LTE mobile broadband networks and services, such that by the end of 2015, Smile will offer clear voice services and have national coverage comparable to the largest 3G network in each of its current countries of operation.
Public investment Corporation on behalf of Government employees Pension Fund contributed to “the funding” at USD 50 million of equity raised. A USD315 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 was also raised.
Smile’s shareholders now comprise Al Nahla Group, a Saudi Arabia-based company, which is the majority shareholder; Renven Investment Holdings, a pan-African investment vehicle, in which Nigerian investors, including the Obijackson Group, are the majority; Verene, representing Smile senior management and social entrepreneurs from South Africa; Telecom Investments, a Saudi Arabian-based investment company; Capitalworks, an active alternative management company, specialising in investment in the African mid-market”; the PIC; and Smile employees.
Terms of the funding
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’s objective is to become the broadband provider of choice for super-fast data and clear voice in each of its markets and 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 percent per year.”
Furthermore, according to the Broadband Strategies Handbook by The World Bank, “a 10 percent increase in the penetration rate of broadband in developing countries is associated with a 1.4 percent increase in GDP per capita.”
One of the successes has been the licensing of 800MHz spectrum for commercial use at an early stage relative to many other countries, including high income ones like Nigeria, Tanzania, Uganda and the DRC
The funding is one of the largest capital raises ever for a telecommunications operator in Africa and brings the total funding committed to Smile since its founding in 2007 to approximately USD600 million.