A significant telecom tower company in Africa has recently obtained a substantial loan of $439 million to manage currency risks and support its operations across various regions. The loan consists of half in South African Rand and the other half in USD ($255 million).
The purpose of this loan is to settle a $430 million debt that was due in 2025, but by refinancing early, the company may benefit from improved terms, potentially reducing interest costs and extending the debt repayment timeline. This move is considered “leverage neutral,” indicating that it won’t drastically alter the company’s debt-to-equity ratio.
Both portions of the loan come with a 4.50% interest rate. The USD part is linked to the three-month SOFR (Secured Overnight Financing Rate), while the South African Rand part is tied to the three-month JIBAR (Johannesburg Interbank Average Rate). These rates fluctuate based on the market conditions, which could impact the overall borrowing cost for the company.
The entire loan amount is a bullet-term loan, meaning that the full amount will be repaid at the end of the term instead of making periodic payments. This provides immediate access to the funds, but requires a lump-sum repayment after five years.
As mentioned by a company spokesperson, this financing is at the group level and will not directly impact any specific market. The company had to lay off 100 employees in mid-2024 due to devaluation in its primary market, leading to increased losses of $1.9 billion in 2023 from $469 million in 2022.
The company has been aiming to reduce its exposure to the dollar and has renegotiated tower contracts with key clients to include fees in both USD and local currency, as well as incorporating a component for diesel costs.