Saturday, 21 October 2017

Eye-watering debt financing and micro lending

By Mary Lennighan, Total Telecom
Friday 08 September 17

The telecoms industry is one of extremes, from multi-billion-dollar, debt-backed takeover deals to the transfer of tiny sums via emerging market mobile wallet services. But it's all relative.

Thanks to online banking, it's rare that I ever need to go into a high street bank these days, but this week I found myself patiently queuing at a counter clutching a cheque (don't see many of those anymore either). Said cheque was made out to me, but had a chunk of my surname missing, so I needed to speak to a real person to find out if I could pay it in. "Since it's for such a small amount, it will probably be fine," the cashier assured me. I winced a bit. I'm not yet sufficiently wealthy to consider £…

Thanks to online banking, it's rare that I ever need to go into a high street bank these days, but this week I found myself patiently queuing at a counter clutching a cheque (don't see many of those anymore either). Said cheque was made out to me, but had a chunk of my surname missing, so I needed to speak to a real person to find out if I could pay it in.

"Since it's for such a small amount, it will probably be fine," the cashier assured me.

I winced a bit. I'm not yet sufficiently wealthy to consider £50 a small amount.

But it's all relative, as I quickly realised when I returned to the office to tackle a breaking news story.

According to unnamed sources cited by Reuters, bankers are pitching financing proposals to Altice ahead of a possible bid for U.S. cable operator Charter Communications. Bankers are working on debt financing of around US$70 billion to back the European group's expansion plans.

That's a huge sum for debt financing. The newswire noted that a debt deal would be one of the largest acquisition financing packages to date. The largest syndicated loan ever agreed was brewing giant AB InBev's $75 billion loan that backed its acquisition of rival SABMiller two years ago, followed by Verizon's $61 billion loan, backing its $130 billion purchase of Vodafone's 45% stake in Verizon Wireless in 2014, Reuters said.

Charter Communications, newly expanded as a result of last year's mega-deal that saw it swallow up rivals Time Warner Cable and Bright House Networks, is worth in excess of $180 million, according to Reuters.

But despite the price tag, Altice is not the only interested party. Softbank and its U.S. business Sprint have been linked with the company, although Charter has denied reports of such a merger.

A number of telecoms players with more modest valuations were reported to be looking towards the stock market this week.

Vodafone New Zealand is pushing on with a share listing plan despite the failure of its merger deal with Sky, a local news outlet reported. Stuff's sources said the mobile operator has hired Deutsche Bank as an advisor and could make an IPO announcement in the near future. Vodafone could seek to value its New Zealand operation at around the NZ$2 billion (€1.2 billion) mark, the news outlet said.

Meanwhile, Italy's Open Fiber is also eying a listing. The fibre network operator, owned by utility company Enel and state-owned lender Casa Depositi e Prestiti (CDP), will be of a scale to consider a stock market listing, chief executive Tommaso Pompei told Milano Finanza.

He gave no hint of a valuation, but it is safe to assume it will be some way off Charter's $180 billion.

At the other end of the scale, which is far more relatable to those of us existing on a journalist's salary, Telenor Microfinance Bank has made headlines this week.

The bank, as its name suggests, specialises in providing financial services and loans in small amounts to reached the unbanked of Pakistan.

Telenor Bank named a new leader this week, as one of its founders – when it was known as Tameer Microfinance Bank – returned to the company as chief executive. Shahid Mustafa said it is time for the bank to "dream even bigger dreams" as it seeks to improve financial inclusion.

On Friday The News International reported that the bank is working with Nestlé in Pakistan to provide micro-finance lending to dairy farmers via its Easypaisa mobile wallet platform.

So far, Telenor Bank has sent around 7.5 million Pakistani rupees (about €59,000) under the scheme dairy farmers supplying milk to Nestlé Pakistan.

That sum is a drop in the ocean for most people in the banking world, but a lifeline for farmers in rural areas.

Much like my £50 cheque…in a way.
 

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