Etisalat Nigeria’s $650 million financing shows that even comparatively new entrants in a fiercely competitive market can assemble a healthy bank following. Etisalat Nigeria was the largest project financing in Nigeria in 2011. Mubadala, the Abu Dhabi government- owned holding company won a 15-year universal access service licence from the Nigerian federal government in 2007.

Mubadala brought in Etisalat, of which the Abu Dhabi government owns just over 60%, as operator. Etisalat also took a 40% stake in the venture. The Nigerian operating company, and borrower under the $650 million financing, is Emerging Markets Telecommunications Services (EMTS), but it has adopted the branding Etisalat Nigeria. By 2009, Mubadala owned 30% of the operating company, Etisalat 40%, and Myacinth, controlled ultimately by Nigerian investors, owned the remaining 30%.

In March 2009, EMTS estimated that it would cost between $1.4 billion and $1.6 billion to fund the roll-out of its network, and mandated Citi as financial adviser on the process. The three shareholders, which were already owed $320 million under a shareholder loan, agreed to fund the roll-out if a commercial bank deal was not possible.

But local lender appetite was strong. Citi assembled an eight- strong group of lenders: First Bank, Zenith Bank, Access Bank, Fidelity Bank, United Bank for Africa, Bank PHB (now Keystone), Guaranty Trust Bank, Oceanic Bank. The seven-year debt has a three-year grace period and four-year repayment period. It breaks down into a N82.5 billion ($550 million) local currency tranche and $100 million dollar tranche.

The debt received over $870 million equivalent in commitments. Part of the proceeds of the fully non-recourse financing will fund the acquisition of 3G technology and equipment, with the rest going towards general capital expenditure. The borrower acquired a 3G licence with the acquisition of Alheri Mobile Services, and has moved fast to roll out 3G coverage in the key population centres of Lagos, Port Harcourt and Abuja.

EMTS
STATUS: Signed 10 March 2011
SIZE: $650 million
LOCATION: Nigeria
DESCRIPTION: 3G network roll-out
SPONSORS: Etisalat (40%), Mubadala (30%), Myacynth (30%)
FINANCIAL ADVISER: Citi
LEAD ARRANGERS: First Bank, Zenith Bank, Access Bank, Fidelity Bank, United Bank for Africa, Bank PHB (now Keystone), Guaranty Trust Bank, Oceanic Bank
SPONSOR LEGAL ADVISERS: Norton Rose (international), Aelex (local) LENDER LEGAL ADVISER Banwo & Ighodalo