Idea Cellular plans to refinance its debt of Rs 40 billion in a bid to reduce its annual interest outgo. The debt includes a loan raised to finance Escotel’s acquisition. Idea had acquired Escotel for about Rs 12 billion in 2004. The refinancing exercise, likely to be completed by April-end, will save up to Rs 300 million annually.
Idea Cellular’s debt is largely short term and has been raised from the Industrial Development Bank of India (IDBI) and a consortium of other institutions. Its interest cost is currently 9-10 per cent, which, post-refinancing, will come down to below 8 per cent. Of the Rs 40 billion debt amount, Rs 4 billion will be for new capital expenditure.
