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Portfolio/Cameroon Telecommunications Limited II

Partial credit guarantee totalling XAF 6 billion to allow Standard Chartered to overcome regulatory single obligor limits and increase its lending to fund Camtel’s expansion of the existing EVDO CDMA wireless network

Cameroon Telecommunications Limited II
Telecom
Cameroon

Overview

DATE OF TRANSACTION

DECEMBER 2014

COUNTRY

CAMEROON

FINANCING PARTNERS

STANDARD CHARTERED CAMEROON SA

GUARANTCO GUARANTEE

XAF 6 BILLION (USD 12 MILLION)

Sector

Telecom

TOTAL TRANSACTION AMOUNT

USD 18.9 MILLION

GuarantCo Benefits

Cameroon Telecommunications Limited (“Camtel”), whilst completing the implementation of the NBN project funded via the first Camtel transaction, decided to expand capacity and functionality in the existing EVDO CDMA network. The resultant increase in capacity and coverage of its high speed wireless broadband service will enhance Camtel’s quality of service and is expected to increase Camtel’s subscribers by more than 600,000.

To finance the USD 18.9 million EVDO project, Camtel approached Standard Chartered Bank (“SCB”) for a medium term loan of USD 18.9 million (equivalent in XAF). SCB was constrained by its regulatory single obligor limit in Cameroon and could only extend USD 6.9m of the required funding before hitting its single obligor limit. GuarantCo’s guarantee allowed Standard Chartered to offer the full amount of the financing in local currency; hard currency financing would have negatively impacted the financial viability of the project and thus GuarantCo’s intervention facilitated full XOF funding and minimised potential fx risk for the business.

Development Benefits

GuarantCo’s support for Camtel has helped improve the financial viability of the EVDO project by allowing the company to better match its debt service obligations with its revenues.

World Bank research highlights that Cameroon lags behind the average benchmarks for Sub-Saharan Africa for internet access. The EVDO is a project is expected to contribute to increasing internet penetration rates in the country. Mobile operators in the country will also purchase bandwidth from Camtel, hence the project will help the overall sector develop in Cameroon.

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