Reliance Communications (RCOM) has obtained a $750-million (Rs 3,000 crore) loan from China Development Bank to fund its nationwide GSM foray.
It’s also learnt that this is the single-largest loan extended to an Indian company by the China Development Bank. RCOM sources said the company has already received all necessary approvals including that of RBI for the said amount, whose tenure is for 10 years and carries a coupon rate of Libor plus 80 bps.
According to sources, the loan would finance RCOM’s GSM equipment order placed with Chinese network major Huawei. In January this year, RCOM had awarded a nationwide GSM rollout contract for electronics valued at about $500-600 million to Huawei. The contract is for 14 circles for which the telco was awarded GSM spectrum.
RCOM’s equipment order for Huawei is its first nationwide GSM rollout contract for electronics, and more such contracts for various equipment categories are expected to be signed over the next couple of months. Under its GSM rollout plans, RCOM plans to invest over Rs 6,000 crore in GSM electronics alone.
“The loan facility would further enhance RCOM’s cost structures for its nationwide GSM network as the next best options available offer a tenure of 6-7 years or a coupon rate higher by 70-80 basis points. RCOM plans to roll out GSM services in some 23,000 towns and 6 lakh villages by year-end and has announced an investment of $ 1 billion (Rs 4,000 cr) in GSM electronics alone. RCOM would be leasing out passive infrastructure from Reliance Infratel, the tower firm in which it holds 95% equity,” a source said.
Company officials confirmed the development. RCOM had earlier floated the tender for 80-100 million GSM lines, valued at around $6 billion and touted as the country's largest order for telecom equipment and one of the largest worldwide. The order, spread over a 3-year period, is likely to be finalised soon. The order will have both 2G and 3G components.
RCOM has said the rollout of GSM services would help it target the fast-growing subscriber additions of 7 million GSM subscribers every month and address the telecom requirements of the existing 172 million GSM customers with the launch of nationwide GSM network, in addition to its CDMA network
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