Liquid Telecom CFO on refinancing debt & Africa expansion

In a strategic move to bolster their presence in the African market, Liquid Telecom has unveiled plans for refinancing their debt and implementing a long-term financing strategy. The telecommunications company aims to offset existing debts and pave the way for expansion into new markets. CNBC Africa recently sat down with Kate Hennessy, the Group Chief Finance Officer, to delve deeper into the company's financial strategy and outlook. The main objective behind the decision to enter the market for financing was to refinance a bond that was initially secured in 2017 and set to mature by 2022. Hennessy emphasized the importance of refinancing well in advance to navigate potential market turbulence efficiently. Furthermore, Liquid Telecom sought to diversify the currency mix of their debt, originally held in US dollars, by incorporating ZAR to hedge against depreciation in the South African Rand. The company successfully raised a $620 million bond and acquired a ZAR term loan to complement the bond, attracting a diverse group of investors from various regions including the UK, US, Europe, and Asia. The participation of Development Financial Institutions (DFIs) such as IFC, D-E-G, and E-A-I-F further bolstered investor confidence in the offering. Despite the challenges posed by the pandemic, Hennessy highlighted Liquid Telecom's resilience, citing a surge in digital and cloud service adoption as a key driver of growth amidst currency fluctuations. The company's investment-grade ratings by Fitch and Moody's played a crucial role in attracting quality investors, underscoring Liquid Telecom's track record and credibility in navigating complex markets. Africa's emergence as a burgeoning growth market, fueled by demographic trends and technological advancements, presents abundant opportunities for Liquid Telecom to expand its connectivity services. Hennessy emphasized the importance of improving broadband access across the continent and revealed Liquid Telecom's commitment to offering a diverse range of connectivity solutions including satellite services for remote areas. Partnerships and investments will play a pivotal role in enhancing broadband penetration, with a focus on interconnecting markets to boost economic development. Liquid Telecom's strategic approach involves coast-to-coast connectivity, enabling seamless cross-border networking within Africa. The recent bond issuance, marked by a significant reduction in interest rates, reflects the company's commitment to driving growth through prudent financial management. The growing digital economy in Africa holds immense potential, with forecasts suggesting a substantial uptick in digital spending in the coming years. Liquid Telecom's robust cloud and digital service offerings position it at the forefront of driving economic transformation and innovation on the continent. Looking ahead, partnerships with global tech giants like Microsoft, Google, and Facebook are poised to unlock new growth frontiers, paving the way for enhanced digital services adoption. Liquid Telecom's financial strength across its diverse markets, with South Africa leading in cloud solutions uptake, underscores its solid positioning for sustained growth. Markets like the Democratic Republic of Congo (DRC) present exciting opportunities for expansion, with a burgeoning economy and untapped connectivity prospects. As Liquid Telecom continues to expand its fiber network and enhance its pan-African connectivity, 2021 promises to be a year of breakthroughs and new market frontiers in the ever-evolving telecommunications landscape.