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|June 25, 1997||
Birla AT&T raises biggest offshore telecom financingA Staff Writer in Bombay
AT&T Communications Limited today announced the mobilisation of India's largest ever telecom project financing raised offshore. The $283 million (Rs 10 billion) financing, also India's biggest ever non-recourse external commercial borrowing in the telecom sector, will complete the financing the Birla AT&T's US $ 1.5 billion (Rs 51.51 billion) project to build the country's largest cellular network.
Birla AT&T, a joint venture between the Aditya Birla Group (51 per cent) and AT&T (49 per cent), is licensed to provide cellular services in Gujarat, Maharashtra (except Bombay) and Goa.
The Financing will allow Birla AT&T to continue one of the fastest cellular network rollouts in India. In May, Birla AT&T became the first operator in the country to provide service along major highways, including the Pune-Bombay highways. The network is expected to serve over a million subscribers by the 2006.
The service is marketed under the AT&T brand name. AT&T is currently the single largest foreign investor in India's telecommunications sector.
"This US$283 million offshore financing is clearly a historic financial arrangement due to its size, quality and the innovative nature of the syndication. It reflects the tremendous progress we have made building the network and will allow us to bring high-quality cellular phone service to even greater numbers of customers in India," said Kumarmangalam Birla, Birla AT&T Communications Limited and head of the Aditya Birla Group.
"Beyond the venture's progress and the strengths of the two partners, we believe the government of India's creation of TRAI (Telecom Regulatory Authority of India) and the Ministry of Finance's important step of raising external commercial borrowing limits to 50 per cent have a strong influence in the success of this groundbreaking transaction," Birla said.
The $283 million syndicated loan was arranged by Bank of America NT&SA through its subsidiary BA Asia, and Toronto Dominion (South East Asia, and Toronto Dominion (South East Asia) Limited, and divided into a foreign currency portion and a rupee tranche.
The financing, with a term of eight and a half years, is entirely non-recourse, not requiring AT&T or the Aditya Birla Group to offer corporate guarantees in this transaction.
$65 million of the offshore tranche is supported by political coverage provided by EKN, the Swedish Export Credit Agency. The syndication was launched after roadshows by Birla AT&T and its two lead bankers in Singapore, India and the United Kingdom.
"The Birla AT&T team, its lead managers and participating banks in the syndicate will make a significant mark in infrastructure financing in India. We are extremely encouraged by the progress of this joint venture and the overall growth of the cellular industry in India," said Mark Hamilton, executive vice president, international operations and development, AT&T Wireless Services, and a member of the Birla AT&T board.
Birla AT&T operates in two of India's most economically developed states, Gujarat and Maharashtra. It began offering a wide range of advanced cellular services at the end of 1996 and today has 11,000 subscribers in Gujarat (Gandhinagar, Ahmedabad and Baroda), Maharashtra (Pune, Nashik and Ahmednagar), and Goa (Panjim, Margao, coastal and interior Goa).
"AT&T is pleased to see the successful launch of financing for this strategic joint venture, which is making rapid progress towards building a world-class cellular service in India," said John J Legere, president and CEO of AT&T Asia/Pacific and member of the board of Birla AT&T. "Birla AT&T represents a key part of our strategy to expand wireless services in Asia/Pacific."
"The success of this international debt raising initiative will allow us to continue to meet and exceed the expectations of our customers, who demand world-class cellular communications from Birla AT&T," said Rajan Mathews, president and CEO, Birla AT&T.
"Today's announcement clearly demonstrates our commitment and the government of India's to explore new financial instruments to foster the growth of the country's telecom sector."
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