Financing funds future growth and expansion of 2degrees

2degrees has secured a $165m credit facility from the Bank of New Zealand and reached agreement with Huawei to deploy 4G network in early 2014.

The BNZ arranged credit facility means 2degrees has a fully funded business plan, providing for continued national network expansion and revenue growth.

2degrees Chairman and Acting Chief Executive Stewart Sherriff says the transition from vendor finance to bank credit reflects the quality of the team at 2degrees, the financial strength of the business and its future plans.

“We’re thrilled to have BNZ join us as a partner in the future of 2degrees. 2degrees has grown rapidly and has a loyal customer base. We have laid the foundation for a sustainable, profitable business and now have the funding to invest in further network expansion across New Zealand,” says Mr Sherriff.

“Having been cash flow positive for almost a year, 2degrees is able to fund its own operations without shareholder funding. Bank finance will accelerate the business.”

BNZ Head of Institutional Banking Paul Blair says the decision to finance 2degrees was based on the strength of the business.

“2degrees has made a great start, proving there is room for a third mobile operator. Having reviewed their future plans we see a growing business that we want to be a part of,” says Mr Blair.

In addition to funding future investment needs including 4G deployment, this facility from BNZ will enable 2degrees to repay vendor finance from Huawei provided in February 2011.

Mr Sherriff says the company’s existing relationship with Huawei, with its global leadership in 4G, would ensure it could continue to deliver simplified products via high quality technology.

“Huawei have provided us with a modern, high quality 2G and 3G network. They’ve always had an eye to the future and have helped us prepare for a fast transition to 4G, which is key to maintaining our value leadership position,” he says.

Huawei New Zealand CEO Arthur Zhang says Huawei is honoured to be continuing its role as exclusive network equipment and related software supplier to 2degrees.

“The initial partnership with 2degrees was a significant milestone for Huawei. We were a relative newcomer to the New Zealand ICT industry, arriving in 2005. The extension of this relationship is a hugely positive step for us - we have grown with 2degrees and share their vision for bringing positive change and innovation to the market,” says Mr Zhang.

Mr Sherriff says 2degrees has grown quickly, offering unique value offerings such as Carryover minutes, Shared data and – last week - calls & texts to Australia from customers’ existing mobile bundle.

“Gaining bank finance will help us deliver more truly different services. It shows others share our belief that 2degrees has the people and the plan to build infrastructure and services that will grow the business further,” he says.

2degrees was advised by Grant Samuel, who played a major role in the co-ordination and execution of the financing process and the final negotiation of the transaction with BNZ and Huawei.

2degrees has more than 1 million customers, operating a national mobile network that services all market segments with Pre Pay and Pay Monthly services. The company is EBITDA positive, employs 760 staff and operates more than 40 retail stores throughout New Zealand, with NZ-based 24x7 customer care.