Neotel funding
Neotel, the fixed-line network provider, will today announce the details of its R8 billion debt and equity financing, which was raised from local banks and financial institutions.
In October, Neotel said it was finalising the funding deal from local financiers such as the Industrial Development Corporation (IDC), Investec, Nedbank and the Development Bank of Southern Africa.
The same financiers provided R2 billion in loans to Neotel two years ago and agreed to further funding for the group.
The R2 billion was spent on the company’s expansion programme, which includes rolling out fixed and wireless networks to provide voice and data products to residential and businesses areas.
The IDC’s head of infrastructure unity, Lindi Toyi, said yesterday that the IDC, as a development finance institution, “fills the gaps” during a crisis. “If you look at infrastructure, it is not something you want to stop because when the boom comes back people with infrastructure will benefit more,” she said.
Toyi said the IDC was considering investing in a submarine cable and an electricity project in Botswana. She added that the repayment period on its investment is between five to seven years, but if it was 10 years, it would be on risky projects such as power.
Ajay Pandey, the managing director of Neotel, said in October the company’s ability to raise the funding, despite the turmoil in financial markets, “shows enough confidence in the business”.
Neotel plans to spend as much as R11 billion, which will be a combination of debt and equity, over the next decade.
Since its official launch two years ago, Neotel has focused on an aggressive roll-out of its products and services to consumers and corporate customers in Pretoria, Durban, Cape Town and Johannesburg. Its prices to the home market are undercutting those of Telkom.
Tata Communications of India, which holds 26 percent in Neotel, is finalising the acquisition of a 30 percent stake owned by Transnet and Eskom.
Business Report
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