Tata's South African telecom arm Neotel in successful funding deal

10 December 2008

Tata Telecom's Neotel, South Africa's new telecommunications provider has announced a project finance deal to the value of almost R4.4-billion (Rs220 crore).

Neotel signed the financing agreements today, largely concluding a two-year long programme to raise long-term financing and has secured R7.5-billion (Rs375 crore) of total funding, replacing all existing bridging finance, and which is made up of a combination of new equity and debt.

The debt facilities have been arranged by three of the leading financial institutions in South Africa - Nedbank Capital, the investment banking division of Nedbank Limited, one of the four largest banking groups in South Africa, Investec Bank Limited and the Development Bank of Southern Africa. 

Herc van Wyk, managing director of Kagiso Financial Services, financial adviser to Neotel, said that the transaction stands out as a milestone in the current difficult financial markets. He said that when potential financiers were initially approached during the first quarter of this year, the financial landscape was vastly different.

The funding will be provided by a consortium of institutions including Nedbank Limited, Investec Bank Limited, the Development Bank of Southern Africa, the Industrial Development Corporation and the Infrastructure Finance Corporation Limited.

''On the 12th of December 2006, we signed a bridging finance facility to the value of R2-billion to get the process started of building our network,'' says Ajay Pandey, MD and CEO of Neotel. ''At that point already we made history as it was the largest non-recourse facility for a start-up telecommunications project in the region, and one of the largest in South Africa then.''