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

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 tmtfinance.com/asia
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. 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.”