Polkomtel's long-term bond program could pave the way for other telecom service providers to raise money domestically.
The zł. 500 million ($125 million) capital-raising measure, announced last week, allows mobile operator to sell fixed or variable-rate notes with one- to three-year maturities to Polish institutional investors. No other Polish telecom company has sold notes domestically with maturities longer than a year.
"It's a good step forward," said Grzegorz Ludziak, the treasurer at Polska Telefonia Cyfrowa (PTC), the nation's No. 1 mobile phone company. Ludziak said it would allow other operators - which usually issue similar securities on international markets - another financing option as they try to diversify debt portfolios.
He noted that PTC was not in a rush to raise capital.
Polkomtel plans to issue the first tranche of notes in its debt program, which may also include commercial paper, this week.
Its size and maturity are to be determined, said Marek Rudziński, the firm's finance director.
Poland-based institutional investors, generally are a risk-averse group, have traditionally soured on bonds with maturities longer than a year. Rudziński said that the longer the maturity, the greater the risk that a corporation would not be able to repay the bonds.
Market watching
Executives at Polkomtel said that because the company's debt ratios are low and mobile penetration high, investors would warm to longer-term notes.
Polish financiers are also hoping for greater long-term bond activity.
"We hope it will pick up," said one Warsaw-based fixed-income banker who asked not to be named. The banker added that if any industry would be able to pioneer long-term bonds, it would be telecoms.
Rudziński said that if there is significant demand from investors, the company would seriously consider a bond issue for funding future projects, such as its third-generation mobile system (UMTS).
Until now, Polish operators needing to finance projects via the domestic market have primarily issued commercial paper - debt that matures in less than a year.
Bank Handlowy, BPH-PBK and ING Bank Śląski are arranging the issue.
- Staff report
