The credit enhancement of Hotspot Network Limited’s debt issue has been announced by InfraCredit, a AAA-rated specialized infrastructure credit guarantee organization. This would allow the business to build, deploy, and commission 120 solar-powered rural telecoms base stations throughout 22 states in Nigeria.
The credit enhancement is part of the second transaction under the Facility, the £10 million Climate Finance Blending Facility (Climate Facility), which is sponsored by the Foreign, Commonwealth and Development Office (FCDO) of the United Kingdom.
The organization said in a statement that the seven-year fixed-rate local currency debt issue deal is the first blended local currency loan issue for a solar-powered rural telephone project in Nigeria and the second transaction under the Climate Facility.
According to a statement, the funding offers a flexible financial support mechanism to local digital infrastructure companies that simultaneously addresses the difficulties and costs of deploying off-grid telecoms infrastructure to the last mile in underserved communities in a climate-smart environment. This is especially true given that traditional lenders have not been sufficiently motivated by the perceived risk of customers’ limited purchasing power in these rural areas.
“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.
In order to build, own, and run solar-powered mobile network base stations in particular rural communities in collaboration with MNOs in Nigeria, it was emphasized that Hotspot established the special purpose vehicle Micropolitan Mobile Connectivity Limited as part of the project.
“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 further noted.
The InfraCredit-led blended financing arrangement offers a special opportunity for expanding digital inclusion in Nigeria and the larger sub-region, according to Morenikeji Aniye, managing director of Hotspot, who was speaking about the deal.
“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 confirmed.
InfraCredit’s chief executive officer, Chinua Azubike, expressed excitement about the novelty and significance of this transaction, noting that it made it possible to provide local currency financing intended to support inclusive, sustainable infrastructure and foster innovation—a feat that would not have been possible without the astute application 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 added.
Sally Woolhouse, the interim deputy high commissioner of the UK in Lagos, stated that the UK is still committed to enhancing digital connection and renewable energy access in Nigeria in order to promote resilient and sustainable growth and assist Nigeria in achieving its climate targets.
He emphasized that the Facility is enabling access to digital infrastructure for both consumers and companies in Nigeria’s unserved and underserved communities by providing green and affordable funding for local developers.
“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.
