RIYADH: Etihad Etisalat (Mobily) signed a SR10 billion loan agreement with seven local banks on Sunday to boost its revenues and invest in its broadband and data services business.
Mobily Chairman Abdulaziz Saleh Al-Saghyir signed the deal with the representatives from the lending banks in Riyadh.
Mobily Managing Director and Chief Executive Officer Khalid Al-Kaf were also present.
The banks which provided the refinancing facility included Al-Rajhi Bank, Banque Saudi Fransi, National Commercial Bank, Riyad Bank, Samba Financial Group, SABB and Saudi Hollandi Bank.
Mobily has more than 20 million customers in its network.
It posted a 16 percent increase in its fourth-quarter profits recently, buoyed by higher data revenue and post-paid mobile subscriber numbers.
Speaking to Arab News following the signing ceremony, Al-Kaf said the agreement paved the way for a Sharia-compliant refinancing loan offered by a group of strong local banks with a repayment facility spread from five to seven years.
“It is a four-tranche Islamic loan divided into SR2.5 billion each,” Al-Kaf said.
He pointed out that the first SR2.5 billion will be spent on revolving activities and for future financing of its projects, another SR5. 8 billion will be reimbursed to settle the old finances, while the balance will be diverted to the implementation of Mobily’s strategic program — growth efficiency differentiation (GED).
He said the revolving fund would also be used to finance sum of its upcoming projects in service applications and network roll out such as 4G, IPTV and fiber network.
Although the maturity of old financing ends in December 2012, Al-Kaf said Mobily undertook the refinancing now since the prevailing Murabaha rate was conducive to obtain such a facility from the banks because of their attractive borrowing rates.
“There is enough liquidity available in the Kingdom and its the right time for such deals,” the CEO said. He said the covenant put out by the banks are flexible to suit Mobily’s expectations as a matured company in the Kingdom.
“The conditions in the agreement were minor and they suited our requirements,” Al-Kaf said.
Al-Saghyir said the GED program of Mobily will be spread throughout a period of five years.
“Its an ambitious program which has some 280 projects in its fold,” he said.
Two tranches of the facility carried a profit rate of 0.7 percent over the Saudi Interbank Offered Rate (SAIBOR), with the remaining two pieces priced at 0.65 percent over SAIBOR.
The three loans being refinanced were the remnants of its SR10.78 billion debut loan — signed in 2007 — a SR1.5 billion facility signed in 2009 and a SR1.2 billion short-term loan agreed in December 2010.