The company, which intends to use the funding for its network plans, is also planning to raise another 3,900 crore equity.
The facility has been fully underwritten by the funding consortium comprising Nedbank Capital, the investment banking business of the Nedbank Group, Investec Bank Ltd and the Development Bank of Southern Africa, VSNL said in a release in Mumbai on Wednesday.
The consortium will jointly finance Rs 900 crore of the debt, while an additional Rs 400-crore will be offered by Industrial Development Corporation of South Africa. The debt is being provided on a project finance basis and has a term period of 18 months.
Neotel managing director Ajay Pandey said that he was delighted to have Neotel partner with such a reputable funding consortium. The finalisation of the funding ensures that Neotel continues to remain on track with the roll out of its promised services.
The consortium is also offering attractive "terms for the debt" to ensure that Neotel is allowed adequate time to establish itself in the market.
Neotel, South Africa's second fixed line operator, intends to re-finance the debt with a long-term facility after 12 months.
Nedbank Capital, Investec and the Development Bank of South Africa have been appointed as lead arrangers for the facility, which will be in excess of Rs 2,600 crore. The company would raise another Rs 1,300 crore of equity from its shareholders.
The funds will be utilised for Neotel's network build out. At present, the company has a network consisting of 1,300 km of optic fibre cable in the 6 main metropolitan areas of the country. This was earlier purchased from Transnet for Rs 165 crore.
At present, the company offers international voice and data transit services for other telecommunications operators.
The rollout of additional services is on track and initial enterprise services will be available in December 2006, while consumer services would be offered by April-May 2007.
