Aircel eyes $500-mn ECB refinance

Telecom service provider Aircel plans to re-finance $500 million through external commercial borrowings (ECB). Sources said the company will use the funds to re-fianance the debt it had taken for spectrum payments, which amount to around Rs 10,000 crore.

“We will start the process of raising loans through external commercial borrowings by mid-August,” said a top company official. Telecom companies have been allowed by the government to re-finance their loans for 3G and BWA spectrum payments by ECBs, through a special exemption. In addition to spectrum charges, telecom companies would need additional funds to upgrade their networks to provide 3G services.

Aircel had recently won the bid for 3G and BWA spectrum licences. While the company paid Rs 6,500 crore for 3G spectrum licence in 13 circles, including Tamil Nadu, West Bengal, Bihar, Orissa and the North East, it paid Rs 3,438 crore for broadband wireless spectrum in eight circles.

The company is also planning to reduce the debt on its books. The net debt of the company stands at around Rs 14,000 crore. “We plan to unwind this debt into a long-term debt-equity structure. But we are not looking at an initial public offer at least for the next six months to reduce debt,” said the source close to the development. An e-mail sent to the company on this development, has not elicited any response.

Aircel also expects promoters to pump in equity into the company by the end of the year, to reduce the debt levels. Malaysia-based Maxis Communications Berhad holds a majority stake of 74 per cent in the company. Sindya Securities and Investments whose current shareholders are the Reddy family of Apollo Hospitals Group, too have a shareholding in the company.

The telecom operator, which has around 41.6 million subscribers and a market share of 6.5 per cent, plans to launch 3G services as soon it gets the spectrum. Aircel was one of the first telecom operators in the country to aggressively promote data services with its special offerings in the social networking space.

“Data surfing is growing by leaps and bounds. Today we have over three billion active data users on our network because of special emphasis and positioning on the internet and we have also packaged it right,” said Gurdeep Singh, COO, Aircel. The company considers 3G services to be an extension of its data offerings, with better quality and speed.