RCom obtains $750mn from china development bank

Reliance Communications (RCom) has received a loan of $750-million (Rs 3,000 crore) for a 10-year period from China Development Bank to fund its nationwide GSM launch.The loan would essentially finance the company's GSM equipment order placed with Chinese network major Huawei. The order is spread over a 3-year period and is likely to be finalised soon. The order will have both 2G and 3G components.
In January this year, RCom had awarded a nationwide GSM rollout contract for electronics valued at about $500-$600 million to the Chinese company Huawei. The contract is for 14 circles for which RCom was awarded GSM spectrum. RCom's equipment order for Huawei is for its first nationwide GSM rollout contract for electronics. More such contracts for various equipment categories are expected to be signed over the next couple of months. RCom plans to invest over Rs6,000 crore in electronic equipment alone for its GSM rollout.
Sources said the company has 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. NNSources said the loan would enhance RCom's cost structures as the next best option available offers a tenure of 6-7 years or a coupon rate higher by 70-80 basis points.
This is the single largest loan extended to an Indian company by the China Development Bank. For its GSM rollout RCOM would lease out passive infrastructure from Reliance Infratel, its 95- per cent owned tower firm.