Telefonica,Sonera near 6.0 bln euro 3G vendor deal

date: 26th January 2001, source: Reuters

Spain's Telefonica Moviles and Finnish ally Sonera are finalising a 6.0 billion euro ($5.6 billion) financing package to help fund the build-out of a new-generation, mobile network in Germany.

Banking sources said on Friday that U.S. group Lucent Technologies and Germany's Siemens would provide 2.0 billion euros each, and a third equipment supplier, which could be Sweden's Ericsson or Canada's Nortel, would supply the remaining two billion.

The deal will enable the debt-laden Spanish and Finnish groups to bypass the syndicated loan market, which has grown increasingly reluctant to finance build-out costs for third generation Universal Mobile Telecommunications System networks.

Speculation has mounted that telecoms equipment groups will offer vendor finance deals after Europe's telecoms operators paid over 110 billion euros on UMTS licences alone last year, saw shares tumble and credit weightings under pressure.

``I wouldn't say that they (Telefonica and Sonera) couldn't get the money from their banks -- but they wouldn't have got as much,'' one banker said.

``The vendors are really pushing the boat out in these early deals to try and win contracts, and are more positive than the banks as they are trying to win further contracts,'' he added.

top