Long-term export credit backs a major 5G push in Poland

Serving one of the fastest-growing economies in Europe, leading Polish telecom operator Play chose ECA financing to fund a major network expansion aimed at delivering high-speed connectivity nationwide. Continued cooperation with Sweden’s Ericsson made the funding eligible for support from EKN, and the possibility of local-currency financing made the deal even more attractive.

The credit facility of PLN 450 million — covered by a USD-denominated guarantee from EKN — will be amortised over 12 years. The local-currency lender is Citi Handlowy, with Citi Europe plc UK branch as facility agent and Citibank N.A., London branch, as arranger. The interest rate on the ECA loan is floating and based on the WIBOR rate plus a margin.

Long-term financing in local currency

Marek Chruściel, Head of Treasury at Play, explains why ECA financing is an attractive alternative to other funding sources:

“We decided to take this opportunity for a number of reasons, one of them being the possibility to obtain long-term financing for 12 years in a form of amortising facility. A similar transaction on the commercial banking market might have stretched, say, five or seven years,” he says, adding, “a local-currency loan is very convenient for Play, as over 90 percent of our revenues are in local currency, so with PLN funding there’s no need to hedge against currency risks.”

“The deal is also quite flexible,” he continues, “in that we can divide the facility into tranches and also refinance some historical expenses. Another huge benefit of an ECA loan is that it does not consume credit limits we have with other banks thanks to the guarantee provided by EKN.”

Expanding 5G to rural areas and smaller cities

The Polish telecom market is fragmented in the fixed-line segment, where many local fixed network providers compete for customers. However, the speed and capacity of 5G mean that households can stay connected via mobile solutions, enjoying HD streaming and other bandwidth-intensive applications.

To reach its goals, Play must push ahead with an ambitious expansion plan.

“Around sixty percent of the population of Poland live in rural areas and smaller cities, and we spend some PLN 1 billion a year on capex to provide best connectivity investing into new base stations, increasing 5G coverage and acquiring new frequencies,” says Chruściel, adding, “We chose Ericsson because of the quality of the equipment, and we are very happy to continue the cooperation and extend it as new technologies are developed.”

“Millions of customers and businesses are already benefiting from our innovations, and the quality of mobile services will increase, helping Poland become a regional leader in digitisation, with 5G technology as a driving force,” emphasises Martin Mellor, Head of Ericsson in Poland.

Growing demand for ECA financing in advanced markets

Rania Hariz, Senior Financial Advisor at Ericsson Group Treasury, notes that ECA financing is increasingly popular even in sophisticated markets.

“More companies are realising the benefits of an ECA-backed loan, such as an attractive repayment structure and longer tenors, which is becoming more common in higher-income markets too. They need to diversify their funding base.”

She adds: “We always try to help our customers, and having EKN onboard means a great deal to them and to us. It is sometimes an added advantage to be able to offer EKN cover.”

At Citi, Nazli Konac Edgu, Director Export & Agency Finance, agrees:

“ECA-backed financing is becoming more and more relevant to large, sophisticated and well-rated companies too — and definitely in telecom, where many top-tier telecom names have used ECA financing lately, both in the US and in Europe.”

Citibank acquired Poland’s Bank Handlowy in 2001, and its strong liquidity made it possible to offer a local-currency facility — still relatively uncommon in the telecom sector.

“Thanks to Citi Handlowy, our Polish unit, we were able to offer long-term local currency liquidity in this transaction in order to meet Play’s financing objectives.”

Energy-efficient 5G supports sustainability targets

Designed for efficiency and scalability, Ericsson’s 5G delivers significant improvements in energy efficiency per gigabyte compared with previous generations, helping reduce environmental impact while meeting growing data demands.

The sustainability aspects of the deal align well with the sustainability commitments of Play’s owner, the French Iliad Group, as well as EKN, where Senior Underwriter Katarina Hirsch explains:

“The loan covenant framework stipulates continued reporting of emissions and how Play is performing in relation to the transition plan.”

At Play, Chruściel concludes:

“We are very grateful to EKN, Ericsson and Citibank for the smooth cooperation and arrangement of this facility.”