i Develop Stocks Advisory

RCom gets Rs 3,000 cr loan from Chinese bank Reliance Communications (RCom) has received a $750 million (Rs 3,000 crore) loan from China Development Bank that would be invested in building a nationwide GSM footprint for the telephony major. The Anil Ambani group company has received the loan for a ten-year period and at a rate of Libor (London Inter-Bank Offered Rate) plus 80 basis points. RCom had received the Reserve Bank of India (RBI) approvals for the loan, sources close to the development said. The loan gives significant advantage to the company's GSM foray as it carries a tenure 3 to 4 years longer and around 50 basis points lower than any other options, they said. When contacted, an RCom spokesperson confirmed the development. The company will use a large part of the loan to purchase GSM electronic equipment from Taiwanese electronic major Huawei. RCom plans to launch nationwide GSM services by the end of this financial year and has announced a capital expenditure of $1 billion for active GSM infrastructure. RCom will lease passive infrastructure from Reliance Infratel, a company in which it holds 95 per cent equity. RCom is aiming at building its GSM infrastructure at 40-50 per cent cost to any greenfield GSM network on a nationwide basis. The company had earlier floated an order for 80-100 million lines for GSM mobile services. It has also received spectrum from the government to launch GSM services in 14 service areas under a controversial new crossover technology policy. This will be the country's largest order for telecom equipment and one of the world's biggest. Worldwide, the installed production capacity of GSM electronics is 250-300 million lines annually, suggesting that the order could account for more than 10 per cent of the global production over the next three years. The order, which will be spread over three years, is expected to be finalised in the next few weeks. The company has begun discussions with leading equipment manufacturers such as Huawei, Alcatel Lucent, ZTE, Ericsson, Motorola and Nokia, among others.