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Aircel raises Rs 14,300 cr, biggest by a telco this year
MUMBAI: Aircel Cellular, the Indian arm of Malaysian telecom giant Maxis Communications, has raised a debt of $3 billion (Rs 14,300 crore) for
expanding its operations. Aircel’s parent Maxis is also planning to relist itself in Malaysia later this year. Aircel’s loan, a combination of rupee and dollar debt, is the largest that has been raised by any Indian mobile services provider in the past one year.

State Bank of India, the largest lender in the country, will account for Rs 10,000 crore, while the rest, which is the dollar component, will come from Standard Chartered, two bankers familiar with the transaction told ET.

The loan will be for a period of four years, with an interest rate of 11.25%. SBI will down sell a part of the loan, implying that SBI will give exposure of a part of the loan to other banks. “Maxis Communications is one of the guarantors,” sources said.

Aircel will utilise the money in expanding operations to four more circles and completing its pan-India footprint by June next year. A part of the money will also be used for capital expenditure in 18 circles where the company is already operational, and has 22 million subscribers.

“Besides, Aircel will pre-pay some of its older debt,” said sources. Aircel COO Gurdeep Singh had said earlier the company will invest $5 billion in India after having already pumped in a similar amount. Aircel, a regional player until recently, has rolled out operations in seven circles in the past six months. It is now the country’s seventh-largest operator.

“Aircel will not use this money for the auction of 3G (third generation) spectrum,” sources added. For the forthcoming auction, Aircel is unlikely to bid in all circles. An e-mail to Aircel remained unanswered. Aircel has also hived off its over 12,000 towers and has invited bids from tower firms for selling its passive infrastructure. “That money will be used for 3G auctions,” said the source.

Maxis, which has 74% in Aircel, is also planning to go public by the end of this year after Malaysian prime minister Najib Razak asked the company to relist on Bursa Malaysia to boost liquidity in the market. Maxis’ promoter, the low-profile billionaire Ananda Krishnan, delisted Maxis in June 2007 in a $12-billion deal. Within days, he sold 25% of it to Saudi Telecom for over $3 billion, largely to fund the expansion of Aircel.

Indian telecom operators have been raising huge amounts of money for expansion. AV Birla group’s Idea Cellular has tied up facilities for Rs 6,000 crore, which will help the company meet this year’s capex and a part of next year’s as well. Vodafone Essar raised Rs 10,000 crore from SBI in February this year.

According to Arpita Pal Agarwal, associate director and telecom advisor at PricewaterhouseCoopers, debt is the only way forward for operators who want to expand networks. “It’s a land grab situation and rolling out networks before consolidation occurs is crucial,” she said.

Not surprisingly, the money-guzzling telecom sector was the highest borrower from overseas in the three years beginning 2006. Cumulative external commercial borrowings (ECBs) of telecom firms between January 2006 and September 2008 stood at a whopping Rs 32,913 crore, according to the RBI.

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