VSNL raises $220 mn for Teleglobe

Telecom & infotech firms hit the acquisition trail

To fund Bermuda acquisition.

Videsh Sanchar Nigam (VSNL), the Tata group long distance telecom operator, has closed a $220 million syndicated loan deal, an industry official said on Monday. It will use the proceeds to fund the acquisition of Bermuda-based Teleglobe International Holdings, the official said.

The interest rate is linked to the London Interbank Offered Rate (Libor) but the spread is not known. VSNL officials were unavailable for comment.

Top Indian corporates are able to raise such money at 70 basis points over Libor, an official at one of the lead arrangers said, implying that the loan has been raised at less than 70 bps over Libor.

The 5-year syndicated loan issue was managed by Standard Chartered Bank, France's Calyon Bank, Export Development Canada and The Bank of Nova Scotia, Canada.

The industry official said VSNL will use the money to fund its $239 million acquisition of Teleglobe.

The long distance telecom operator completed the Teleglobe acquisition in February.

The acquisition will add over $1 billion in revenues to VSNL's books.

For the 9-month period ended September 30, Teleglobe reported consolidated revenues of approximately $735 million.

With the acquisition, VSNL's global network now spans 4 continents and 240 countries, with 20-terabit capacity and it carries 17 billion voice minutes. Its global base comprises 1,400 wholesale and over 650 enterprise customers.

VSNL has 275 points of presence in 25 countries and access to 5 geo-stationary satellites through more than 30 dedicated earth stations.

The company also has a significant stake in 2,06,356 kilometres of terrestrial network of fibre and sub-sea cable.

The network includes VSNL's leased capacity in SEA-ME-WE-4 (South East Asia, Middle East and West Europe-4).

SEA-ME-WE-4 is a submarine cable system linking south-east Asia to Europe via the Indian sub-continent and middle east.