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IFC subscribes to 16% of Liquid Telecom’s US$620m bond issue

By , Sub Saharan Africa Business, Tech, News and Development Journalist
Africa , 26 Feb 2021
Nic Rudnick, group CEO of Liquid Telecom.
Nic Rudnick, group CEO of Liquid Telecom.

The World Bank’s International Finance Corporation (IFC) has snapped up 16% of the US$620-million bond issuance by Liquid Telecom, which according to ratings agency, Fitch, is facing risks emanating from regional uncertainties - but is on course for steady revenue performance.

The 16% represents about US$100-million of the bond issue by Liquid – which has broadband and fibre networks in about 13 African countries, with operations in Kenya, South Africa, Zambia and Zimbabwe, among others.

The Liquid Telecom long-term paper was listed on Ireland’s main exchange, Euronext Dublin on Thursday.

Liquid will use funds from the bond issue to re-finance existing debt instruments and to unlock more funds to expand its broadband internet, digital and cloud services across Africa

Liquid Telecom Group CEO Nick Rudnick emphasised that there are “great opportunities” for the company “to address under developed telecommunications and internet access” across many parts of Africa that are lagging behind.

“Our refinance enables us to continue to invest in the African digital eco-system including driving penetration of digital and Cloud-based services to businesses who may not previously have had the resources to benefit from them,” he said.

Much has been said about the upside potential to boost internet access in Africa, with the cost of gadgets and infrastructure deployment cited as the main challenges, especially in rural areas.

The IFC is looking to bridge these hindrances through investing in private sector led initiatives to boost internet connectivity.

Digital infrastructure investment

The corporation’s COO Stephanie von Friedeburg said the best approach to ensuring much-needed internet access for everyone in Africa “is to invest in digital infrastructure” development.

“Our investment in the Liquid Telecom bond will help the company free up capital to further expand broadband access across Africa,” she said.

However, weak operating and volatile regulatory environments in key African markets such as South Africa and Zimbabwe presents uncertainty for Liquid Telecom, said Fitch ratings agency earlier this week.

It cited currency volatility in South Africa, the holding up of about US$30-million in cash in Zimbabwe, a country facing foreign currency challenges and a “mismatch between cash flow and debt (that) could lead to some volatility” as the major risk factors for the company.

Fitch Ratings agency nonetheless puts Liquid in position for healthy recovery of revenue as African markets lean on data adoption and enhancement as a way of adapting to the post-COVID-19 pandemic.

“South Africa remains a key contributor to the group's revenue while the rest is generated in countries such as Kenya, Zambia and Zimbabwe, which have weak operating environments. Regulatory uncertainty in these jurisdictions can have a negative impact on Liquid Telecom,” said Fitch in a 22 February ratings write-up on the company.

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