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EBRD loan to Kazakhtelecom on eve of market liberalisation
$110 million to refinance and modernise Central Asia’s largest telecoms operator
The European Bank for Reconstruction and Development is leading a consortium of international banks in lending $110 million to OJSC Kazakhtelecom (KTC) to help the largest telecoms operator in Central Asia restructure its debts and modernise its network in the context of the government’s planned liberalisation of the market.
The deal represents a major expansion of a $50 million EBRD loan made to KTC in 1999, and marks the first time a loan to the Kazakh telecoms sector has been syndicated. The loan was jointly arranged by the EBRD and Standard Bank London Limited.
The EBRD is lender of record for the full amount and is providing $60 million of its own funds with a seven-year maturity. The remaining $50 million is being syndicated to five commercial banks, which are advancing five-year funds.
Standard Bank London, the joint mandated arranger, is underwriting the syndicated portion of the loan and taking $9 million onto its own books. Raiffeisen Zentralbank Österreich (RZB) and Citibank are acting as arrangers and taking, respectively, $18 million and $14 million. Credit Lyonnais and WestLB AG are acting as co-arrangers and taking $4.5 million each.
This loan comes at an important time for Kazakhtelecom given that the government is committed to start liberalisation of the country’s telecoms market in 2004, said Izzet Güney, director of the EBRD’s Telecoms team. Mr Güney added that the access Kazakhtelecom is gaining to international capital markets through this transaction will help it optimise its funding costs and also invest in the development of its network, two key targets ahead of the company’s planned privatisation.
Adrian Walker, Head of Syndications, Financial Institutions and Corporate at Standard Bank London, said: “We are delighted at the positive outcome of this transaction and would like to extend our congratulations to Kazakhtelecom. We are pleased to have worked with the EBRD in opening up the medium to long-term international credit markets to top-tier Kazakh corporates.”
Kazaktelecom, in which the Kazakh government has a stake of 50 percent plus one share, is the country’s national telecoms operator and main provider of fixed lines.
As part of its efforts to help the Kazakh government promote a transparent regulatory framework for the sector, the EBRD’s legal experts have been providing technical assistance to the authorities. The governments of Japan and Taipei China have each contributed €200,000 in donor funding for this programme, and €364,000 has come from the European Union.
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