The board of Russian state-controlled Rostelecom (MCX:RKTM) has approved the Rbs15.6bn (US$232m) facility it agreed with VTB Bank in July.
The board of Russian state-controlled Rostelecom (MCX:RKTM) has approved the Rbs15.6bn (US$232m) facility it agreed with VTB Bank in July.
Guaranteed by the Ministry of Finance, Vnesheconombank and VTB, the loan comes at a time when Russian operators are contending with increased capital expenditure demands due to the weak rouble.
Rostelecom will use the funds to modernise its IP/MPLS backbone network, improve capacity and bandwidth. In July an executive told TelecomFinance that the loan will cover 80% of the upgrade cost, with the remainder to be financed by the company’s own funds or by “other means of financing”.
As reported in April, the telco applied for the loan via a government project financing scheme providing funding for projects worth up to Rbs20bn (US$354m).
The company’s ‘Digital Framework Russia’ network development project is expected to cost a total Rbs19.5bn (US$345m), with the difference paid in equity.
Participating companies can borrow a maximum 80% of the total cost. Banks within the central bank’s framework, such as VTB, can refinance loans at 9% per annum, while borrowers themselves pay a maximum interest rate of 11.5%.