South African telecommunications provider Telkom has secured a seven-year loan worth R902-million (US$127-million) from a group of international banks.
Part of the loan will go towards buying goods from Chinese telecoms equipment manufacturer Huawei, while the remainder will be used for capital expenditure for the company’s recently launched mobile network 8ta.
The fifth mobile network in South Africa, 8ta was launched in October 2010. It’s pronounced “heita”, and is township slang for “how are you?”
Telkom plans to spend R6-billion ($848-million) in total building up the network by 2014.
Banks involved in the recent loan agreement include Barclays Capital, Absa Capital, China Development Bank, Bank of China, China Construction Bank, Citibank, HSBC and the Sumitomo Mitsui Banking Corporation.
The deal is backed by China Export and Credit Insurance Corporation, also known as Sinosure, a Chinese state-owned credit export agency.
Gabriel Buck, head of Export Credit Agency (ECA) financing at Barclays Capital, said: “We are pleased to deliver to Telkom a long-term, competitive Sinosure facility. This represents the first financing for Telkom under their ECA umbrella framework, and will provide a benchmark for any future Sinosure financings.”
An export credit agency or investment insurance agency acts as the mediator between national governments and exporters, while supplying finance for exports.
"Given the existing liquidity constraints within the bank and bond markets, this facility provides Telkom with an attractive and flexible source of additional cost-effective liquidity," said Anthony Wilter of Absa Capital's investment banking division.
New mobile number
At the time of 8ta’s launch, managing executive of Telkom Mobile, Amith Maharaj, said: “We will provide the platform for South Africans to communicate more. I'm not exaggerating when I say that this is the start of a new era in mobile phone communication in South Africa and consumers will at last have a real choice.”
Telkom SA MD, Pinky Moholi, added: "We wanted to create a brand that builds upon Telkom's heritage around quality and innovation. At the same time, we realised the need to be simple and to be authentically South African."
Telkom signed a national roaming agreement with its prospective competitor MTN, enabling it to use MTN’s infrastructure to launch its services.
Telkom is one of the leading telecommunication service providers in South Africa and in Africa. Traditionally a fixed-line operator, it first ventured into mobile network territory with the launch of 8ta.
The company was founded in 1991 and listed on the Johannesburg Stock Exchange in 2003, 12 years after it got off the ground.
In 2006 Telkom’s domination was broken when Neotel became the second fixed-line operator in South Africa. As a mobile network operator, Telkom faces stiff competition from Vodacom, Cell-C, Virgin Mobile and MTN.
Telecoms equipment provider
Huawei is a leading telecommunication solutions provider and was established in 1988. It provides network infrastructure, software, services and devices.
In 2008 it was recognised by Business Week as one of the world's most influential companies and in 2009 it gained the second largest global market share of radio access equipment.
Huawei has worked with some of the world’s leading computer giants, including Intel, Microsoft, IBM and Hewlett-Packard.