MTN Rwanda on Wednesday secured a Rwf50 billion loan from a syndicate of eight local banks.

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The local commercial banks include; Ecobank Rwanda, Cogebanque, BPR Atlas Mara, I&M Rwanda, Bank of Kigali, KCB Rwanda, Equity Bank, and GT Trust Bank.

A syndicate is formed when a lender invites others to service a client’s request for a loan.

In this instance, the agents of the facility were led by Ecobank Rwanda alongside Cogebanque and BPR Atlas Mara with local law firm, Trust Law Chambers as the appointed legal team for the transaction.

The three banks are the main lenders and they invite fellow financiers.

The loan has a seven-year tenure.

MTN Rwanda officials say that the loan is earmarked for a capital expenditure programme for the next two years targeting expansion and modernisation of the network and related IT systems.

Diatile Lily Zondo, the firm’s Chief Financial Officer, said that the funds will also go into covering operating costs which have been going up over the years as the firm increases services portfolio.

“The loan is designed to fast-track expansion of our network to accommodate growing subscriber numbers and services,” Zondo said.

The key network operating costs are rentals of masts (operated by IHS), transmission costs, and maintenance.

MTN Rwanda’s Chief Technology Officer Fabrice Ndatira told The New Times that expenditure will go into improving quality of network to support various services including data, calls and mobile money services, among others.

Overall, he said, the upgrade should improve quality of services for clients across the country.

According to MTN Rwanda Chief Executive, Bart Hofker, the loan is justified by rising customer growth and consumer demand across all business lines.

For instance, voice minutes grew by about 51 per cent and data traffic by over 100 per cent while mobile money usage grew by over 50 per cent.

The upgrade comes at a time when MTN has been on the receiving end of multiple customer complaints in service delivery such as network failures, data irregularities among others.

Loan details

According to Ecobank Rwanda Managing Director, Alice Kilonzo, the loans was oversubscribed by 127 per cent with the eight financiers committing about Rwf63.3 billion.

In the event of an oversubscription in a syndicate, the agents of the facility allocate the rest of the participating banks a portion of the loan.

The two sides of the deal remain tight-lipped about the lending rate, citing a non-disclosure clause. However, the loan’s cost is below market rate considering the amount involved and confidence in the firm’s positioning.

Kilonzo said that it also reflects the improved positioning of local banks to provide capital for large projects as well as growth in the local economy.

She said that based on the reception of the loan request by local banks, there are likely to be similar deals in the future.