The Development Bank of Southern Africa (DBSA) has revealed the extent of its investment in a new telecommunications landscape for South Africa, having played a crucial role in the funding of Neotel. 

Neotel signed a loan facility of R2-billion with the DBSA, Investec Bank Limited, Nedbank Capital and the Industrial Development Corporation (IDC). DBSA, Investec Bank Ltd and Nedbank Capital were joint lead arrangers, underwriters and lenders in the transaction and are lead arrangers for the long-term project finance facility to Neotel. The funding is intended for Neotel’s capital expansion and network roll-out.
“The commencement of business by Neotel marks the beginning of a momentous change in the telecommunications sector and it should provide more choice to consumers, enhance service delivery and increase access to telecommunications services," says Lucy Chege, DBSA’s investment officer: project finance.
Neotel’s shareholders include Tata, Transnet, Eskom, Communitel, Two Consortium and Nexus, the black economic empowerment partner.
In addition to the above facility, DBSA and the IDC has provided R484-million in loan finance to Nexus, which will allow it to fully acquire and pay for its 19% shareholding in Neotel. For the DBSA, this marks the second tranche of funding to Nexus, having initially provided it with a R14-million bridge facility to enable it to acquire its initial stake in Neotel.
According to Simon McGill, DBSA’s principal investment officer: corporate finance, the Nexus deal appealed to DBSA because of Nexus’ extremely broad-based shareholding that permits literally thousands of individuals to participate.