Lagos, Nigeria, November 21, 2003
—In its most significant investment in Nigeria since the return of democracy, the International Finance Corporation -- the private sector arm of the World Bank Group— recently
finalized agreements for a $100 million investment in MTN Nigeria, the country’s leading cellular operator.
Mr. Peter Woicke, IFC Executive Vice President, and Ms. Haydee Celaya, IFC’s Director for Sub-Saharan Africa, handed the $100 million check to MTN Nigeria at a ceremony in Abuja attended by Mr. Pascal Dozie, Chairman, MTN Nigeria, and other members of its board and top management. Also present were a number of high-level Nigerian dignitaries.
The MTN investment is one of IFC’s largest in the telecommunications sector and its second largest investment to date in Sub-Saharan Africa. It is unique in that $50 million of its exposure has been structured to enhance a Nigerian bank syndicate, thereby allowing the company to have access to local currency and to develop a medium-term local bank lending market.
IFC’s investment is part of a $395 million financing package comprising a local currency syndicate that includes Nigerian banks and senior loans from IFC, Standard Chartered Merchant Bank, DEG and FMO. The total financing package has been arranged by Citigroup (London) and Standard Bank (London) to support MTN Nigeria’s $1.3 billion capital expenditure program. The financing will be used to expand and improve MTN’s network in Nigeria, allowing it to reach smaller communities and boost service quality.
MTN Nigeria is part of MTN Group, one of Africa’s leading cellular network operators. In February 2001, MTN Nigeria was awarded a 15-year GSM license through an open auction process and launched its service in August 2001. By February 2003,it had connected its millionth active subscriber. The company now provides coverage to 56 cities and over 1,000 villages and communities spanning all of Nigeria’s six geopolitical regions. Owing to the huge demand for telecommunication services, the company achieved a total of more than one million subscribers within less than two years.
Mr. Woicke said, “MTN Nigeria is providing much-needed telecom services to the Nigerian people and we are delighted to support this project. Liberalization of the mobile telephone sector is revolutionizing telecommunications, improving service quality, and expanding access to previously under-served parts of the population. This is IFC’s most significant investment in Nigeria and one of its largest projects in Africa. The project clearly demonstrates that successful reforms will attract institutions such as IFC, as well as the private sector.”
According to Stephanie von Friedeburg, the World Bank Group’s Manager of Investments in the Global Information and Ccommunications Technologies Department, MTN’s success and the rapid growth of the cellular market in Nigeria are the result of sector liberalization put in place by the government of Nigeria with support from the World Bank Group. “In a matter of a few years since the reforms began, there are now almost four times the number of installed telephone lines. This is clearly the best illustration that that a fair and transparent licensing process and the introduction of competition can benefit all stakeholders in the economy. Furthermore, IFC’s investment complements the ongoing advisory work of the World Bank by catalyzing significant private capital at tenors normally not available in Nigeria,” she said.
Haydee Celaya noted that this investment also fitted well with IFC’s strategy for Nigeria, as it has facilitated private participation in key infrastructure areas and has supported the Government’s reform of the telecommunications sector. “It has also encouraged the participation of a large number of local banks in a medium-term syndication, thereby helping the development of local financial markets”, she said.
MTN Nigeria is controlled by one of Africa’s largest cellular companies, MTN Group Limited of South Africa (
),. The MTN Group Limited of South Africa is an African cellular network operator listed on the Johannesburg Securities Exchange. MTN launched services in 1994 and now has more than 5 million subscribers in South Africa, Nigeria, Cameroon, Uganda, Rwanda and Swaziland. It is one of South Africa’s largest and most successful black-controlled companies.
“We appreciate very much this first opportunity of cooperation between IFC and MTN. IFC’s ability to provide long-term maturities required for a telecom project of this size, and its support to local currency financing, will help MTN meet the demand for cellular services in NigeriaThe confidence which our operation continues to generate among Nigerian and international financial institutions provides evidence of our commitment not only to our business objectives but also to the larger developmental aspirations of Nigeria. This is at once gratifying and humbling and encourages us not to relent in our efforts, despite the occasional challenge,” said Mr. Pascal DoziePhuthuma NhlekoAdrianGroup.
The mission of IFC (
) is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY03, IFC has committed more than $37 billion of its own funds and arranged $22 billion in syndications for 2,990 companies in 140 developing countries. IFC's worldwide committed portfolio as of FY03 was $16.8 billion for its own account and $6.6 billion held for participants in loan syndications.