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Released in South Africa for information purposes only, the bonds may not be purchased by residents of the Common Monetary Area.
First ever European High Yield bond for a pan-African issuer
07 November 2006, London: In a growing indication of international investment interest in the rapidly expanding African communications market, Gateway Communications, a leading provider of voice and data connectivity in Africa, today announced the successful placement of $100 million of high yield senior secured bonds.
The transaction will enable Gateway to pursue its strategy of expansion into new African markets as well as developing its high quality, next generation technology and services to provide even greater levels of connectivity across the continent. As a sign of their confidence in the company’s growth prospects, and as part of this transaction, the founders of Gateway have increased their shareholding in the company to a majority position.
In South Africa post transaction Gateway remains a Black-Empowered Company with in excess of 30% of its equity held by Historically Disadvantaged Individuals.
The issue, by Gateway Telecommunications Plc is for US$100 million Senior Secured Notes maturing in 2013 with a coupon of 9.875%. Citigroup was sole bookrunner for the high yield offering.
Gateway is a leading provider of connectivity services to telecommunications operators, particularly mobile, into and out of over 40 African countries. Gateway also provides national connectivity; connecting mobile subscribers within the same country where there is limited backbone telecommunications infrastructure. In the last 12 months ended 30 June 2006, Gateway generated $131.4 million of revenue and $18.7 million of EBITDA.
Julian McIntyre, President and Chief Treasurer of Gateway Communications, commented:
“This transaction represents a first for a pan-African issuer and is a confirmation of growing international investment interest in the African continent.
“The widespread institutional support has been very encouraging and confirms our strong track record of cash flow generation, the high growth markets in which we operate and the breadth of our executive team.
“Our strong growth performance and cash conversion combined with our quality, reliability, breath of service and leadership position in Africa put us in an excellent position to continue to grow the business.”
Peter Gbedemah, Chief Executive of Gateway Communications, commented:
“We are at an exciting stage in the growth of our company. We have developed excellent customer relationships with virtually all major African mobile and fixed-line players. We currently provide direct connections to 85 million subscribers in over 40 countries.
“Completing this transaction allows us to invest further in meeting the expanding requirements of our customers and offer enhanced connectivity across the continent.”
ENQUIRIES
Gateway Communications
Tel: + 44 20 7173 1700
Julian McIntyre
College Hill
Corinna Dorward/ Charlie Howard (London)
Tel: + 44 20 7457 2020
Fred Cornet (South Africa) Tel: + 27 11 447 3030
Gateway Overview
We are a leading provider of voice and data connectivity services to telecommunications operators, in particular mobile telecommunications operators, in the rapidly growing African telecommunications market. In the 12 months ended June 30, 2006, 90.4% of our revenue was generated from services delivered to or from mobile telecommunications operators. We also offer a range of connectivity services to multinational corporations and large- and medium-sized businesses operating in Africa.
Our customers include established regional mobile telecommunications operators in Africa, such as Celtel, Vodacom and Millicom, and major international telecommunications operators, such as AT&T, BT, France Telecom and Verizon. We provide these customers with international voice, leased line and data services through our Carrier Services Division, which accounted for 95.8% of our revenue for the 12 months ended June 30, 2006.
Our customers also include large international businesses such as DaimlerChrysler, Procter & Gamble and Unilever, to whom we provide managed network and electronic transaction services through our Business Services Division, which accounted for 4.2% of our revenue for the 12 months ended June 30, 2006. Our current group was formed in June 2005 when we acquired substantially all of the assets and liabilities of Link Africa, which was then the international carrier services subsidiary of Celtel.
Our Carrier Services Division operates in the African telecommunications market, which has grown rapidly in recent years against a backdrop of market liberalization. According to Informa Telecoms and Media (World Cellular Information Service (‘‘WCIS’’)), the number of mobile subscribers in Africa increased at a compound annual growth rate (‘‘CAGR’’) of 53.4% to 134.3 million between 2000 and 2005. This increase made Africa the fastest growing mobile telecommunications market in the world during that period. International voice traffic in sub-Saharan Africa (excluding South Africa) is estimated by a study we commissioned by Balancing Act, a telecommunications consultancy and publisher, to have increased at a CAGR of 22.7% between 2000 and 2005. The same study estimated based on bandwidth usage patterns in our principal markets that the total bandwidth demand by mobile operators in sub-Saharan Africa (excluding South Africa) for satellite-based cellular backhaul services, our principal leased line and data service, increased at a CAGR of 133.9% from the end of 2000 to the end of 2005.
Mobile penetration levels continue to be low in Africa, in particular in sub-Saharan Africa, compared to Europe and other emerging markets, leaving significant potential for further growth. According to Informa Telecoms and Media (WCIS), mobile penetration in sub-Saharan Africa was 12.1% in 2005 and is forecast to increase to 29.5% by 2010. The rapid growth in the African mobile telecommunications market is, we believe, driving the trend for African mobile telecommunications operators to outsource connectivity requirements to third-party suppliers like us as they focus on the expansion of their networks and subscriber bases. The total number of international voice minutes carried by our group’s and predecessor businesses’ networks increased at a CAGR of 39.9% between 2003 and 2005, while the revenue generated by our cellular backhaul services increased by 21.1% over the last six months. We expect to be able to continue to take advantage of future growth in our markets.
Gateway’s Key Strengths
We benefit from the following key strengths:
· Leading market position
· Attractive, rapidly growing market
· Attractive business model
· Extensive, high-quality network infrastructure
· High-quality, long-term customer relationships
· Strong, experienced management team
These materials are not an offer for sale of notes in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. The issuer of the notes has not registered, and does not intend to register, any portion of the offering in the United States, and does not intend to conduct a public offering of notes in the United States.
This document is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) to investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (iii) high net worth companies, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons in (i), (ii) and (iii) above together being referred to as “relevant persons”). The notes are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.
Stabilization, if undertaken, will be in accordance with FSA rules. |
