Aircel to raise $2 bn debt for expansion

Aircel, a Chennai-based GSM service provider, is negotiating with lenders to raise around $1.5-2 billion (Rs 6,000-8,000 crore) debt to fund its expansion plans in the country.

This is the largest debt being raised by an Indian telecom company. Reliance Communications is also in talks to raise $1 billion (about Rs 4,000 crore) through foreign currency convertible bonds (FCCB).

According to sources, the debt would be partially raised through external commercial borrowings (ECBs) and rupee term loans. The company has already initiated talks with the lenders and the funds are expected to be tied up in the next couple of months.

A company spokesperson declined to comment on the matter.

Malaysia's Maxis Communications has a direct and indirect holding of 74 per cent in Aircel, while the remaining is held by the Chennai-based Reddy family, which runs the Apollo group of hospitals.

ECB term loans are comparatively cheaper than rupee terms and the GSM service provider would look at getting maximum loans from outside the country. The company would only go for rupee term loans after the closure of the ECBs, they said.

Industry analysts said Aircel's plan to raise such a huge amount through debt indicated that the company was certain of getting spectrum for pan-India operations.

This is much in line with leading mobile operator Bharti Airtel's plans to raise $2.5 billion, Reliance Communications plans to raise $2.5-3 billion and Idea's to raise $1 billion capex for this year.

Aircel would use the fund for its expansion plans, including extending its presence to the remaining 14 circles in the country. At present, the company has operations in nine telecom circles and has also begun rolling out WiMax, 3G and other technologies.

The company is also close to being awarded spectrum in certain circles and its application has been approved by the department of telecommunications (DoT). The decision is now to be taken by the ministry of telecommunications.