ISSUE 11 SEptEmbEr 23 2009                                                           www.tmtFINANCE.COm
Tracking telecom f...
Telecom Leader Interview: Tata Communications
                                                 the proposal is still pendi...
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Sanjay Baweja CFO Tata Communications talks about Wimax growth opportunities


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Sanjay Baweja share details about Tata’s continued global growth as well as equity and debt financing options

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Sanjay Baweja CFO Tata Communications talks about Wimax growth opportunities

  1. 1. ISSUE 11 SEptEmbEr 23 2009 www.tmtFINANCE.COm Tracking telecom financing opportunities that matter in the Emerging Markets CONtENtS Market sceptical of Zain LEADEr INtErVIEw page 2 bid Banking and industry sources are sceptical about the Vavasi-led US$13.7bn bid for control of Zain. “We’re DEAL tALK page 3 very surprised and can’t see the logic at all,” said one leading telecoms banker. With no buy side banks in Vivendi looks to LatAm place; two of the leading consortium members reluc- Bharti debt pricing talk Middle East loan bonanza slows tant to commit; and rumours of previous unfulfilled Indosat to raise debt financing financing projects, the chances for the deal don’t look Banks pitch for Royal Group great. Pages 3-4 Subsea Cable financing opportunities Tata Comms CFO interview ASIA NEwS pages 4-5 In the first of our Telecom Leadership interviews, Tata Etisalat tipped for MIllicom Communications CFO Sanjay Baweja talks to Telecom China Unicom and Telefonica Deal Alert about Tata’s continued global growth as well Reliance and S Tel strike share deal as equity and debt financing options. Page 1 Datacom and Aircel share deal 3G auction for December American Tower to pay US$450m Telco execs meet in Singapore Telkom buys towers stake With 30 leading speakers already confirmed, the Huawei wins Hutch deal inaugural TMT Finance Asia conference in Singapore on Vimpelcom pays for Laos Broadband boost for the Kiwis November 5-6, is on course to be the biggest gathering More competition for Vietnam for telecom dealmakers in Asia in 2009. Page 6. mIDDLE EASt NEwS pages 7-8 Early Bird rates end Sept 30 There is just one week left to take advantage of Mobile 3 licence relaunch? reduced early bird rates for the TMT Finance Asia Qtel signs US$2bn loan conference. Don’t miss out by registering now at www. Viva mulls IPO Zain SA to boost loan Mobily to refinance US$400m Busy times for debt bankers AFrICA NEwS pages 8-10 There is plenty of choice for telecom debt bankers with Bharti, MTN, Indosat, Etisalat, The Royal Group and an Bharti raises offer Asia Pac subsea cable project approaching the market. Mandates coming up Orascom targets smaller acquisitions However, that is not stopping aggressive pricing levels New Nitel sale deadline on some deals, with talk of 315bps for Bharti. Pages New Meditel owners consider sale? 2-4 pEOpLE mOVES page 10 Return of the telco IPO DIArY DAtES page 11 Asian equity markets are opening up for telecom com- panies again, with Maxis and several telecom towers companies tipped for public debuts.
  2. 2. Telecom Leader Interview: Tata Communications the proposal is still pending. Tata Communications to raise merger and Tata pursues global NTT announced in June that it wanted acquisition finance, despite the likelihood strategy to invest in Tata Communications, to increase its foothold in the fast growing of an increase in transactions across the telecom markets. However, he said that Indian telecom market. It said that it was he welcomed the positive impact that in- When Sanjay Baweja joined Tata Com- creasing M&A activity will have on pricing waiting for the Indian government to ease munications as chief financial officer in in the telecom sector generally. “We have foreign investment norms before taking a January 2009, the global economy was in reached a level where consolidation will, final decision on the investment and other free fall and prospects for growth were if anything, help to stabilise prices, as the options such as forming joint ventures receding fast. However, his first nine major transactions will reduce the stress and applying for a license to provide tele- months at the helm have seen the leading on pricing,” he said. com services. Indian laws allow foreign provider of new world communications direct investment of up to 74% in telecom accelerate its impact globally by success- fully entering a number of key new mar- companies, but do not permit foreign Global growth opportunities telecom operators to offer services or kets and territories. It has recently been seek telecom licenses without a tie-up Tata Communications provides telecom courted by other leading global operators, with a local firm. services to businesses and also owns including NTT Communications of Japan, and operates under-sea telecom cable but government restrictions on structural WiMAX licence funding networks. It has three core businesses financing challenges must be met first. at different stages of development: the Telecom Deal Alert met with Mr Baweja In the meantime, Tata Communications world leading voice carrier business, in London on September 8, prior to him is likely to raise debt financing to cover which is mature and stable; the enterprise flying on to North America, to find out the the US$300-400m needed for the reserve and data base business, which is showing key financing challenges and opportuni- price for a WiMAX licence in the spectrum real growth, and the emerging markets ties at the leading global provider of voice auctions timetabled for later in the year. business which is the biggest engine for business. Mr Baweja would not confirm the amount growth. The company has also been busy to be raised but said that it was unlikely forging pivotal new international deals Equity and debt opportunities to expand in new markets including an he would need to raise much more for the auctions as he did not expect the investment in China’s telecom market Mr Baweja told Telecom Deal Alert that through a joint venture for 50% owner- price to go far beyond the reserve price he was raising more debt financing in the ship in China Enterprise Communications of US$300-400m. With just US$1.1bn near term but said that the company was Limited (CEC) which is awaiting regulatory net debt on its books at present, raising very much in favour of raising non-debt approval, strategic investments in South a further US$400m debt financing will financing in future, if it could gain the African converged services operator, Neo- not pose problems for the triple A rated necessary government approval. tel, Sri Lanka and Nepal and a venture telecom operator. Indeed, with India’s “We believe in the need for equity in the with BT through which the UK telco will debt market especially liquid lately (see company,” said Mr Baweja , “and we are largely outsource its wholesale voice busi- Telecom Deal Alert issue 10), and further very open in our views as to how this ness to Tata. growth increasing the gap with the rest of could be structured.” He said this could The Tata Global Network encompasses the market, pricing should be especially include a special purpose vehicle (SPV) one of the most advanced and largest competitive. General market pricing is structure. However as the Indian govern- submarine cable networks, a Tier-1 IP currently around 300bps and Tata is likely ment is still the largest shareholder with a network, with connectivity to more than to command better rates, say sources. 26.12% stake, the management still needs 200 countries across 300 Pops, and more Mr Baweja said that no lead arrangers had its approval if it is to raise finance via the than 1 million square feet of data center been officially mandated for the new debt equity markets. and co-location facilities. Tata is also lead- financing at the time of the interview. Japanese telecom operator NTT Commu- ing the way with its cutting edge managed Telecom Deal Alert banking sources sug- nications is widely reported to be keen on telepresence services including a global gest that a number of banks are position- investing in Tata Comms but Mr Baweja network of rooms that is fast expanding ing themselves for a deal. denied that any discussions had begun. across the world, and its international eth- Further finance could also be raised for Until such guidelines have been drawn up ernet service portfolio which is building investing in other projects, especially data by the government the company is not in on its existing MPLS and IPLC capabilities. centres which Mr Baweja said offered a a position to commence negotiations with Mr Baweja, who has been CFO at Tata great opportunity because of the need any potential partner, he said. However since January 2009, said: “We are most to provide facilities that are closer to the the company has made it clear that it concerned with acquiring customers. Our customer. Tata is currently investing in a would be keen on going down this route network is fairly young and there is con- data centre in Singapore which banking if the government would authorise it. stant capacity augmentation. The growth sources suggest would require around Indeed, Tata Communications has already surge continues – especially in the emerg- US$180m. written to the government earlier this ing markets – and we will continue to see Mr Baweja said there were no plans for year seeking approval to raise funds, but more voice business growth.”