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Financial briefs of March 2011

March 24, 2011
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RCOM secures Rs 87 billion loan from China Development Bank (India) 

Reliance Communications (RCOM) has completed the procedure for obtaining a Rs 87 billion loan from the China Development Bank to part-finance the cost of 3G spectrum and equipment. The loan will be funded by syndicates of Chinese banks and financial institutions. The China Development Bank has underwritten the loan and is part of the consortium of Chinese banks providing funds. According to RCOM, the loan will lead to an annual interest cost saving of more than Rs 5 million for the operator.

ITIL and Ascend Telecom Infrastructure to merge tower businesses 

India Telecom Infra Limited (ITIL) and Ascend Telecom Infrastructure have decided to merge their tower businesses. The merger would be a cashless transaction, and post-merger, around Rs 4 billion would be provided for developing additional infrastructure. The merger will create a telecom tower operator with a pan-Indian footprint, approximately 4,000 towers, and an average tenancy ratio of over 1.6. Ascend Telecom and ITIL are independent telecom tower operators and cater to mobile operators like Idea Cellular, Bharat Sanchar Nigam Limited, Vodafone Essar, Tata Teleservices Limited (TTSL) and Aircel. Ascend Telecom is currently owned by equity firm New Silk Route while India Telecom Infra is jointly owned by Infrastructure Leasing and Financial Services, and TVS Interconnect Systems.

Viom Networks to raise Rs 15 billion debt 

Viom Networks is planning to raise Rs 15 billion through a mix of domestic and overseas borrowings from a consortium of banks led by Deutsche Bank. The debt will be repayable over a period of 10 years. The consortium also includes German development finance agency DEG, the Bank of India and the Bank of Baroda. The interest rate on the external commercial borrowing and rupee finance is expected to be about 350 basis points above Libor. The funds would be used to finance Viom’s Rs 20 billion tower acquisition plans.

Tata Communications acquires BitGravity 

Tata Communications has completed the acquisition of San Francisco-based BitGravity, a provider of content delivery network (CDN). The company will be integrated as a subsidiary of Tata Communications and BitGravity’s chief executive and co-founder Perry Wu will continue to lead the existing team from San Francisco in conjunction with Tata Communications’ global CDN team.

TTSL plans rights issue 

TTSL is planning to announce a rights issue for its shareholders. Some of the major shareholders of the company such as Tata Sons, NTT DOCOMO and Temasek Holding will participate in the issue. However, the issue is not expected to change the equity structuring of the company. The increased equity capital base will be used by TTSL to repay a part of the debt on its books pertaining to 3G licence payouts and GSM roll-out expenses. TTSL had to pay Rs 58.64 billion to obtain spectrum in nine circles.

Karbonn Mobile to buy South Korean mobile design house 

Indian handset-maker Karbonn Mobile is planning to buy a South Korean mobile design house for about $40 million in an all-cash deal. The deal will be a strategic acquisition to market low-cost 3G handsets in Brazil, Indonesia, Nepal, Sri Lanka, Bangladesh, Nigeria and Kenya. Karbonn has not yet disclosed the name of the firm. The purchase will be financed with a portion of the $250 million that Karbonn is planning to raise from private equity firms over the next three months.

Zain Iraq receives $400 million debt from IFC (Iraq) 

Zain Iraq, a subsidiary of the Kuwait-based Zain Group, has secured $400 million debt from the International Finance Corporation (IFC). The seven-year debt comprises a $155 million IFC loan; a $50 million loan committed by Ahli United Bank; and four syndicated parallel loans totalling $195 million from Proparco, the Infrastructure Crisis Facility, Deutsche Investitions- und Entwicklungsgesellschaft and the Netherlands Development Finance Company. Zain Iraq will use these funds to improve its service coverage and quality.

MobiFone to launch IPO (Vietnam) 

State-owned Vietnam Mobile Telecom Services (MobiFone), Vietnam’s second largest wireless network operator by subscribers, has decided to launch an initial public offering (IPO) in 2011. In August 2008, the Credit Suisse Group was hired to act as a financial adviser for the IPO, which valued the operator at around $2 billion. France Telecom, which has been pursuing a stake in MobiFone for the past four years, has expressed interest in acquiring a share in the firm.

Zygmunt Solorz-Zak places $6.32 billion bid for Polkomtel 

Polish media and energy investor Zygmunt Solorz-Zak has placed a bid of over $6.32 billion for Polish wireless network operator Polkomtel. The bid is above the highest valuation of Polkomtel determined by the BZ WBK brokerage. It is also the highest bid offered for the company so far. The operator is soon likely to shortlist bidders for conducting due diligence. Polkomtel’s current shareholders include the Vodafone Group, Polish oil refining company PKN Orlen and copper mining group KGHM Polska Miedz, which hold 24.39 per cent each. Poland-based power utility PGE Polska Grupa Energetyczna owns a 21.85 per cent stake while coal mining company Weglokoks holds 4.98 per cent in Polkomtel.

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