Finance is available say bankers

Leading international investment bankers and lawyers also featured on specialist panels at the conference to debate M&A and financing opportunities and challenges. The M&A Advisers Panel led by Joachim Fleury, Partner and Head of Global Communications, Media and Technology Group, Clifford Chance featured heads of M&A from Citi, HSBC and Barclays Capital and drew a major crowd to debate transaction activity. The advisers were predicting significant international consolidation in the Asia region, but said prices needed to steady in the short term.

In the Financing session chaired by David H. Zemans, Managing Partner, Singapore, Milbank, telecom debt bankers were eager to confirm that they were still active despite the retreat from the market by some banks since the global financial recession. “Banks tend to be more conservative, but [the telecom] debt market is still functioning and acquisition driven finance is still available as evidenced by recent financing of Bharti deal,” commented Stephen Ho, Head of TMT Asia, DBS Bank in the Financing Growth session. “Even though the transaction didn’t ultimately go through, the market continues to support this type of activity”.

While pricing of telecom debt went up it has started to come down again slightly said the bankers. “What a difference 12 months makes because things are a lot better than they were,” said Arjun Soota, Managing Director, Telecoms Group, Standard Chartered. “However, there has been a flight to quality. It’s only the high grade companies that are really going to the market: the bond markets have had a great run. We are also starting to see the high yield market pick up, but we’ve seen very little activity from the equity markets other than Maxis.” Mr Soota also commented that private equity investors see opportunities going forward in towers in Asia where valuations have come back quicker than expected. “They still have a lot of money to put to work in this sector, “ he said. Tom Fuller, Head of Telecom and Media, Asia Pacific, Standard Merchant Bank said that there were concerns among bankers that the growth premiums had been permanently removed from the telecom sector. “Going forward we will be focusing a lot more on value added services businesses from a financing perspective,” he said.

Torsten Thiele Head of Telecoms, Project & Infrastructure Finance, at Investec highlighted how his firm is offering structured tiered financings with equity levels with partnerships with companies with strong routes in to the emerging markets.

ZTE seeks alternative financing routes Zarif Imam, Global Financing Director of ZTE Corporation, China’s largest listed technology vendor, generated lots of interest from telecom operators and bankers at the event by highlighting the vendor’s perspective on financing and the availability of capital.

“There has been a real focus on tier 1 customers who have access to markets, especially bond markets in the last 6 months,” said Mr Imam. “Tenders have definitely become short. Even the highest rated customers don’t want to extend to more than 3 years and this is a real source of concern for us. The combination of these two factors makes it very difficult to find banks to support

us in the way we want. Increasingly at ZTE we are trying to expand our banking relationships globally.For instance we have framework financing in China and we are looking for other alternatives to commercial banks… such as DEG and FMO in Germany and the Netherlands. We want to work with the main banks again, and we argee that the days of covenant light deals were unacceptable, but the pendulum has perhaps swung too far the other way.”



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