One of Nigeria’s foremost telecommunications service providers, MTN Nigeria, is now expanding its capital base and repositioning itself preparatory to tackling head-on, the expected breakneck competition which the recent acquisition by India’s Bharti of Zain Group’s Africa holdings  will pose.

MTN Nigeria has obtained a loan facility of N250 billion from a consortium of 15 Nigerian banks. The telecom giant is also obtaining additional funding totalling $450 million from two foreign banks. The facilities were arranged by MTN itself and will deploy the proceeds to further expand its network across the country to brace up for the heightened competition which Bharti’s entry into the Nigerian market will pose. On Monday, India’s Bharti Airtel sealed its longstanding $9 billion acquisition deal with the Zain Group of Kuwait, in which it took control of its Africa operations, including Zain Nigeria.

Bharti has a reputation for trying to distress the competition wherever it operates, by crashing prices and expanding geographical coverage, among other strategies.

A day after closing the deal for acquisition of Zain’s Africa assets for $10.7 billion, Bharti Airtel said it would introduce the concept of ‘affordable tariffs’, a move that may initiate a price war in the continent. “We will not go for tariff cut. We will go for a long-term affordability strategy which is good for the customer and for the company,” Bharti Airtel CEO and in-charge for international operations Manoj Kohli said.

 “The monthly usage is 60-70 minutes per customer in Africa against 450-500 minutes in India. There is a pent-up demand. Tariffs are high in Africa. Our objective is not to introduce low tariffs in Africa… Our objective is affordability. We will see the level of affordability normal customers want,” he said. People believe that MTN is up to the task and that subscribers stand to gain from the heightened competition that is in the offing.

As at September 2009, MTN had 28.74 million subscribers, while GloMobile had 16.22 million and Zain had 14.93 million in Nigeria.

At the formal signing of the loan agreements in Lagos on Wednesday, MTN’s chief executive officer, Ahmad Farroukh, described the development as “another historical milestone in the development of telecommunications in Nigeria.” As the largest ever naira-denominated syndication in the country, this record-breaking financing follows the raising of a $2 billion facility in 2007 which won African Telecoms Deal of the Year award by Euromoney. At the time, it was the largest facility granted to a single country telecommunications operator in Africa. MTN Nigeria also won the award for its maiden financing in 2003.

The naira tranche of the facilities has a tenor of five years and the banks that participated in the syndication include Access Bank, Afribank, Bank PHB, Citibank Nigeria Limited, Diamond Bank, Ecobank Nigeria, FCMB and Fidelity Bank.