Idea plans to raise $528 million through foreign debt (India)

www.WirelessFederation.com/news: 25 billion rupees ($528 million) is planned to be raised by India’s third- largest mobile-phone company by value, Idea Cellular, by selling debt or borrowing funds overseas after winning high-speed phone licenses. Plan to borrow 40 billion rupees has already being completed by the company and is looking to raise debt in foreign currency.

509.7 billion rupees has been raised by the Indian government from auctioning the wireless permits to phone companies including Idea and Vodafone Group Plc. It has raised concern that the demand for funds will boost short-term interest rates. Rise in the two year swap rates in relation to the five-year borrowing cost has narrowed the spread between them to near the least in 14 months.

Analysts are of the opinion that in India if you go for any of the banks your interest rate will be eight to nine percent and if you fund the same thing through foreign borrowings, and you can do it cheaper.

15 percent of Idea is owned by Malaysia’s second-largest mobile- phone company Axiata Group Bhd, and its share fell 2.4 percent to 50.15 rupees in Mumbai on May 26. Licenses in 11 circles have been won by the telco at the end of the 34 day auction and it has agreed to pay the government 57.7 billion rupees for the rights.

According to Chief Financial Officer Akshaya Moondra, the company won’t ask its investors for equity to fund its expansion and added that if 3G picks up, and there are large capacity expenditure requirements, then it will see whether that has to be done

As a result of the of increasing risk of a cash call by its Indian unit, Axiata was cut to neutral” from outperform” at CIMB Investment Bank Bhd. on May 12. 15 billion rupees has also been borrowed by the company from the European Credit Agencies.