Tuesday, July 25, 2017

IGT raises $122m for telecoms tower building

Irrawaddy Green Towers (IGT) has borrowed US$122 million from a group of European development finance institutions to fund part of its rollout.

Cars drive past a telecoms tower in Yangon.( Aung Htay Hlaing/The Myanmar Times)Cars drive past a telecoms tower in Yangon.( Aung Htay Hlaing/The Myanmar Times)

The syndicated loan forms part of a $230 million IGT investment plan, although the firm’s total infrastructure investment is likely to be even higher, said a spokesperson at one of the lenders.

Dutch development bank FMO arranged the loan, which consists of a $13 million nine-year subordinated loan and a senior $109 million eight-year loan.

The $122 million package is entirely dollar denominated, with no structuring to hedge against currency risk, said a spokesperson at Deutsche Investitions- und Entwicklungsgesellschaft (DEG).

The senior loan was syndicated across Germany’s DEG, France’s Proparco, the UK’s CDC Group, the Belgian Investment Company for Developing Countries (BIO) and Austrian entity Oesterreichische Entwicklungsbank (OeEB).

FMO lent the subordinated portion of the loan from its Infrastructure Development Fund – managed on behalf of the Dutch Ministry for Foreign Trade and Development Cooperation.

Of the $109 million senior loan, DEG contributed $19.8 million, and BIO and OeEB lent $12.2 million each. The proportions for CDC and Proparco were not available.

The funding package is part of IGT’s $230m near-term investment plan in mobile communications infrastructure across Myanmar.

IGT plans to build a network of 2000 towers providing coverage to some 14 million people, according to FMO. But IGT’s total investment was likely to end up being higher than the $230 million figure, a DEG spokesperson said.

Tower builders have sought and received funding from a range of different sources in the past few years. Pan Asia Majestic Eagle completed the first cross-border, non-recourse financing arrangement in the country back in 2014.

More recently, OCK Group signed an agreement in December last year with its Myanmar partner King Royal Technologies, and operator Telenor Myanmar, to build 920 telecom towers. OCK will invest around $75 million in building the towers, which will be delivered and leased to the Norwegian operator this year. OCK plans to build 3000 towers over a five-year period.

Malaysian telecoms giant Axiata Group in November 2015 sold a $500 million wakala sukuk, or Islamic bond, of which around $125 million of the proceeds will be used to fund the acquisition of a majority share in Myanmar Tower Company. The share will be held by Axiata’s wholly owned subsidiary Edotco Group.

Apollo Towers raised $30 million in equity from Myanmar Investments International Limited (MIL) in July last year, after receiving approval for a $250 million loan from the US government’s development finance arm, Overseas Private Investment Corporation (OPIC), the previous month. The direct loan will be used for the development of a network of 2500 telecommunications towers, according to OPIC.