Telecard Ltd is to raise Rs 4 billion through a term finance certificate issue and equity injection to speedily complete its Wireless Local Loop and Long Distance & International Projects as the government deregulated the telecom sector inviting private companies to provide fixed line phone services.
Telecard has appointed Faysal Bank Limited, along with BMA Capital Management, as Financial Advisers & Arrangers to assist the company in raising the required financing from local capital market.
The company is raising Rs 2 billion TFCs in order to partially fund its total capital expenditure target of Rs 4 billion.
The balance funding will be through an equity injection of Rs 2 billion.
It will spend nearly Rs 700 million for capacity expansion and Rs 3.3 billion for frequency spectrum cost. Telecard is positioning itself to become the Number One alternative telecom services provider and a leading telecommunication multi-service operator.
The impending deregulation of telecom market in Pakistan offers ample opportunities to players with existing operations and significant experience of the local market.
The company not only has the requisite experience but also has a sound track record which will reduce the exposure of new lenders who wish to lend in the wake of these attractive new opportunities.
Ajaz Rahim, Head of Investment Banking at Faysal Bank, told this reporter that Telecard offers attractive investment opportunities both to lenders and equity investors.
"Telecard is ideally positioned to capture the attractive growth opportunities offered by the telecom sector due to its already existing network which is deployed countrywide", said Rahim.
Telecard's decision to raise part of its funding requirement through equity "reflects the confidence of the sponsors in the company's business plan" and "create a sustainable capital structure for future growth" Rahim said.
Presently, PTCL has approximately 4.3 million subscribers, while the total customer base is expected to grow to at least 7.5 million in the next five years.
Current market size, in terms of annual revenues, is estimated to be Rs 81 billion and is expected to grow to an annual voice size of Rs 230 billion in the next five years. Current market size for digital subscribers' lines is approximately Rs 3 billion.
The data market is expected to grow by 300 percent in the next five years, increasing the number of ports from 20,000 to 60,000. The company's strategy moving forward is to be the largest WLL players in the market by aggressively acquiring new subscriber base (residential and business) and to implement long distance and international business with primary focus on captive traffic generated by the group companies.