Russia’s telecommunication operator MegaFon has announced it has signed a financing deal with China Development Bank (CDB) under which it will receive $500m for a development of its mobile networks. However, under the terms of the agreement, all equipment and services for the network’s upgrade will be purchased from Huawei, the Chinese telecommunications giant.
“The financing is another milestone in our long-term relationship with CDB. It underlines MegaFon’s high credit quality and the trust our partners place in us as we continue to enjoy strong access to international capital markets as well as focus on enhancing of our relationships with lenders and equipment suppliers globally,” says Ivan Tavrin, CEO of MegaFon.
“CDB has continuously been a fundamental, long-term partner bank to us which has put its balance sheet in form of seven facilities for MegaFon since 2001 to fund procurement of equipment and services from Huawei. With the new Financing Mandate Agreement we see further expansion of our successful with both CDB and Huawei,” adds Gevork Vermishyan, CFO at MegaFon.
One of the key tasks of China Development Bank, which is led by a cabinet minister level Governor and operates under the direct jurisdiction of the State Council, is raising funding for large infrastructure projects.
The agreement between CDB and MegaFon was signed in the presence of both Russia’s and China’s prime ministers.