State-run mobile operator TeleTalk seeks to get $221 million loans from the Chinese government, mainly to expand its network to provide third-generation technology (3G).
The operator said its board had accepted the loan proposal, now pending with the Economic Relations Division (ERD) for further processing.
“The telecommunication ministry is in talks over the $221 million loan proposal,” said Md Mojibur Rahman, managing director of TeleTalk.
“If the plan gets through, the money will be spent on existing 2.5G network expansion and 3G.”
In the six-operator mobile market, TeleTalk is stuck at the bottom with 0.87 million customers.
After inception in 2005 with only one million customer acquisition capacity, TeleTalk has failed to add customers to its network over the last three months because of poor infrastructure.
Warid Telecom, the latest entrant to the market, received 2.25 million customers in a market of 43.49 million customers.
TeleTalk officials said the deal would be bilateral — government-to-government. “If the deal is signed finally, the Bangladesh government will give the money to TeleTalk,” said a high official of the company.
The loan is not free from strings.
TeleTalk will have to import at least 50 percent of its equipment from China. However, it can import equipment from any telecom vendor with a plant in China.
The government is trying to get the loan at 2-2.5 percent interest rates to give it to TeleTalk at 3 percent, said another official, asking not to be named.
TeleTalk has recently sought a strategic partner to update its network. Also, the company has a plan to list on the capital market.
People familiar with the plan said the listing might take place after having a good expansion deal so that the company can go to the market with a healthy balance sheet.
TeleTalk is the country’s smallest operator by subscribers with a 2.31 percent market share. It started operations in 2005 amid high hope, but failed to compete with the five other operators.
In a recent development, the company’s board approved a Tk 273 crore network expansion project. Under the project, first-phase work went to European Nokia-Siemens Networks and Chinese Huawei to expand its network.
The TeleTalk board chairman said the company would add 18 lakh new customers in the current fiscal year as part of the first phase work.
If the government manages $221 million from China, the numbers of subscribers will reach 8 million in a couple of years, officials hoped.
Along with executing its network expansion programme, TeleTalk will adopt 3G technology, which includes capabilities and features such as enhanced multimedia (voice, data, video, and remote control), usability on all popular modes (cellular telephone, email, paging, fax, videoconferencing and Web browsing) and broad bandwidth and high speed.
The telecom regulator has announced that it will issue three 3G licences early next year.
Grameenphone is the market leader in the mobile telecommunication sector with around 20.79 million subscribers. Orascom Telecom Bangladesh, which operates Banglalink, is the second with around 10.17 million subscribers as of October 2008.