The largest mobile operator in Russia and the CIS, MTS, has secured three separate loans totalling €413mn from three international lenders to finance investments in network development. The loans will be provided by the European Bank for Reconstruction and Development (EBRD), the Nordic Investment Bank (NIB) and the European Investment Bank (EIB).

MTS secured over half the sum – €218mn – from the EBRD. The EBRD’s portion of the loan will be paid in two tranches: €115mn with a maturity of seven years, and €103mn – to be provided by commercial banks – with three years’ maturity.

A separate €10mn portion of the EBRD’s own €115mn A loan to MTS will fund the telecoms industry’s first trial of a programme to cut the operator’s carbon footprint through the use of renewable energy to power 20 base stations in rural areas of central Russia. If successful, this could bring mobile telephony to isolated communities now beyond the reach of electrical grids.

NIB is providing a €40mn seven-year A loan to MTS and syndicating a further €40mn B loan with a three-year maturity.

MTS has agreed a loan of €115mn with the EIB.

This IFI funding is earmarked to finance the rollout of Russian mobile operator MTS’s 3G network in Russia and an upgrade of its systems in Turkmenistan and Uzbekistan.

According to a statement released by the EBRD, the transaction demonstrates how syndicated loans for top-rated Russian corporate borrowers can still be successful despite the world financial crisis.

“The loan will support MTS expansion and the pilot deployment of new technologies that reduce energy consumption of base stations, incorporate renewable energy sources, and reduce the carbon footprint of telecommunications,” the release said.

MTS, which is listed on the NYSE, is majority-owned by JSFC Sistema, one of the largest private sector conglomerates in Russia and the CIS.

Mikhail Shamolin, president and CEO of MTS, comments: “For the past nine months, MTS has been working closely with lending organisations to leverage its financial strength in an increasingly volatile lending environment.

Cooperation with the EBRD, NIB and EIB enables MTS to carry through on its investment programmes, while simultaneously allowing the company to better manage its cash flows.”