InfraCredit mobilises funding for rural telephony projects in 22 states

InfraCredit, an AAA’-rated specialised infrastructure credit guarantee institution, has announced the credit enhancement of Hotspot Network Limited’s debt issue enabling the company to construct, install and commission 120 solar-powered rural telecoms base stations across 22 states in Nigeria.

The credit enhancement is under a co-financing arrangement with the £10 million Climate Finance Blending Facility (Climate Facility) funded by the United Kingdom Foreign, Commonwealth and Development Office (FCDO), the second transaction under the Facility.

According to a statement by the institution, the seven-year fixed-rate local currency debt issue deal is the second transaction under the Climate Facility, and the first blended local currency debt issue for a solar-powered rural telephony project in Nigeria.

The funding provides a flexible financial support mechanism to local digital infrastructure companies simultaneously addressing the challenges of rigor and cost of deploying off-grid telecoms infrastructure to the last mile in unserved communities in a climate-smart environment, especially as the perceived risk of limited purchasing power of customers in these rural areas has created insufficient incentives for traditional lenders, a statement said.

“InfraCredit will support the programme of debt capital raise of up to $68.6 million required to finance the deployment of up to 2,000 rural telephony sites over the next three to seven years, aligning with the Biden-Harris Administration’s Global Initiatives on the Economic Empowerment of Women.

“This pre-assessed pipeline will mobilize at least N47 billion ($59.5 million) of domestic institutional capital to construct 500 rural telephony sites and 34 MW of isolated off-grid renewable energy projects in 1,338 unserved communities across 35 states in Nigeria. It will connect 261,098 unserved households and small businesses to telephony connectivity, energy access or combination of both, in creating 7,846 jobs and reducing 611,688 tonnes of GHG emissions,” it noted.

It stressed that under the project, Hotspot established the special purpose vehicle, Micropolitan Mobile Connectivity Limited to raise local currency finance from the debt capital markets, to build, own, and operate solar-powered mobile network base stations in select rural communities in collaboration with MNOs in Nigeria.

“The Climate Facility’s subordinated first-loss capital helped de-risk and reduce the capital cost of the project by unlocking InfraCredit’s “AAA”-rated guaranteed senior debt that crowded in first-time matching investments from nine domestic institutional investors in a solar-powered rural telephony project for unconnected rural communities, resulting in a blended affordable interest rate.

“Hotspot’s rural telephony project involves the deployment of telecoms voice and data networks in partnership with MTN and other Mobile Network Operators (MNOs) in the country. Under a partnership with the largest Mobile Network Company, the Company targets up to 500 base stations within 1 year to scale to up to 2,000 sites over a three to seven-year period, under which it will build, own, and operate mobile network base stations in select rural communities in Nigeria,” it noted.

Speaking on the transaction, the Managing Director of Hotspot Morenikeji Aniye said InfraCredit-led blended financing facility provides a unique opportunity for accelerating digital inclusion In Nigeria and the greater sub-region.

“Hotspot Network Limited is connecting the unconnected in Sub-Saharan Africa by providing mobile network access for unserved and underserved rural communities. We have a unique opportunity to accelerate digital inclusion in growth markets and digital infrastructure as a key driver of sustainable growth and shared prosperity, we appreciate our development partners facilitated through InfraCredit, including USTDA, FSD Africa, KFW and FCDO for co-traveling with us on this digital inclusion journey to self-reliance,” Aniye said

Chief Executive Officer of InfraCredit, Chinua Azubike, said the institution is excited about the uniqueness and impact of this transaction, enabling local currency finance that is designed to promote inclusive, sustainable infrastructure and foster innovation that would not have been possible without the smart use of catalytic capital from FCDO and their development partners.

“We believe that working with our development partners in leveraging private sector and domestic institutional investors to unlock climate-aligned inclusive digital infrastructure projects in off-grid unserved communities has the greatest potential to create most jobs, bridge the digital gender gap and lift more people out of poverty which aligns with our strategy to increase climate action and gender impact in our guarantee portfolio,” he said.

Acting UK Deputy High Commissioner in Lagos, Sally Woolhouse, said UK remains committed to increasing access to clean energy and digital connectivity in Nigeria, to drive sustainable and resilient growth, and support Nigeria in meeting its climate goals.

He stressed that by providing green and affordable financing for local developers, the Facility is creating access to digital infrastructure in unserved and underserved communities in Nigeria, for both households and businesses.

“We are very pleased that this innovative UK-funded blended finance facility, managed by InfraCredit, has supported the first local currency debt issue for solar-powered rural telephony in Nigeria. Using a scalable approach, this UK-funded facility is mobilising domestic institutional investment into much-needed climate-aligned projects,” he said.