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Jan 27, 2010
Banglalink moves to raise Tk
425 crore through bonds in a
bid to shore up its foothold
in Bangladesh's growing
telecom market, insiders said
yesterday.
The second largest mobile
phone operator has already
taken steps to raise the debt
capital through private
placement to meet capital
expenditure mainly for
strengthening its network.
The operator offers 13.5
percent interest per annum for
of its five-year tenure bond
of Tk 1 crore each, which is
proposed to be redeemed by
2014 through amortisation of
principal amount on a
year-on-year basis, said bankers.
The Securities and Exchange
Commission (SEC), responsible
for approving capital issue
bids by corporate houses, has
already given a go-ahead to
the Banglalink plan to raise
funds through secured bonds,
officials said.
A bond does not represent
ownership in a corporation,
while a share of stock gives
ownership in the company in
which one is investing.
“We have asked the company to
issue bond within one year,” a
senor official of SEC told The
Daily Star, seeking anonymity,
as he is not authorised to
talk to the media.
The bankers said Banglalink,
owned by Orascom Telecom (Bd)
Ltd, a subsidiary of
Egypt-based Orascom Telecom
Holdings (OTH), offers
guarantee from its parent
company OTH for the proposed
secured bonds.
"The bond money will be
utilised to expand our network
capacity to ensure quality
service," said KM Zakaria,
head of treasury of Orascom
Telecom (Bd).
Zakiul Islam, director
(government relation) of
Banglalink, said: "We are
taking the initiative for
developing three areas
equipment deployment, capacity
building and network coverage."
He said the operator will also
develop its GPRS (General
Packet Radio Service) and EDGE
(Enhanced Data Rates for
Global Evolution) capacity.
For example, the official said
Banglalink network will be
upgraded to 2.75G from the
existing 2.5G (generation).
Citigroup's banking arm in
Bangladesh Citibank NA is the
lead arranger and placement
agent for the bond offering of
the operator, which grabbed
24.2 percent market share by
winning over 1.20 crore
subscribers as of September 2009.
Orascom Telecom, which debuted
here in February 2005 by
acquiring Sheba Telecom (Pvt)
Ltd, moves to borrow from the
local money market at a time
when Indian giant Bharti
Airtel is joining the race
with the fourth largest Warid
Telecom.
Bharti has already announced
an investment of around $300
million to develop Warid
network in Bangladesh.
Banglalink, operating GSM
(global system of mobile
communication) network here,
offers both prepaid and
post-paid voice, data and
multimedia services.
Grameenphone, majority owned
by Norwegian Telenor, leads
the market of 5.24 crore users.
Insiders said Banglalink's
fund raising bid has already
been oversubscribed by
institutional investors such
as banks, non-bank financial
institutions, mutual funds,
insurance companies and
corporate houses.
Higher interest rate than the
present lending rate of 13
percent at banks and more than
Tk 4,700 crore in investment
(around $680 million) by
Orascom since 2005 have
contributed to the
over-subscription, the bankers
said.
“Capability and commitment of
the sponsors of the company to
penetrate more in Bangladesh
cellphone market has
encouraged us to consider
subscribing Banglalink's
bonds. The interest rate it
offers is also attractive,”
said a senior official of a
private bank.
People close to the
transaction expected that the
issuance of bonds will be
completed by next month.
Source: The Dailystar
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