Russian mobile operator MegaFon (MCX:MFON) is to receive a ten-year loan worth up to US$600m from CDB (China Development Bank) to back purchases of equipment and services from Shenzen-based Huawei.
Russian mobile operator MegaFon (MCX:MFON) is to receive a ten-year loan worth up to US$600m from CDB (China Development Bank) to back purchases of equipment and services from Shenzen-based Huawei.
Equipment purchase costs have skyrocketed for Russian operators due to the weakening rouble and international sanctions.
The loan will enable MegaFon to upgrade its network and “effectively manage refinancing and currency risks with the financial backing of CDB”, said Gevork Vermishyan, the telco’s CFO.
Present at the signing were Vladimir Putin and Xi Jinping, who together witnessed a number of trade agreements between the two countries during the Russian president’s visit to Beijing this week.
In addition to funding purchases from Huawei, MegaFon will also use some of the financing package to refinance its current debt.
MegaFon CEO Ivan Tavrin said the CDB agreement set “the strategic direction for business development between our organisations”.
“During [the] last 10 years, this partnership has proved to be very effective and we are looking forward to exploring new business opportunities with CDB.”
In October 2014, MegaFon signed another CDB financing agreement, aimed solely at financing Huawei purchases. CDB has been providing facilities to MegaFon since 2001.
MegaFon is Russia’s second largest mobile operator after MTS. Smaller rivals include state-controlled Rostelecom and Tele2 Russia.