China Eximbank provides $211 million preferential buyer’s credit for 3G Technology and Expansion of 2.5G Network Project

Project narrative

In September 2006, the Chinese Government pledged to provide a $211 million concessional loan to the Bangladeshi state-run mobile operator Teletalk but the deal expired without any loan agreement finalized by August 2008. However, in 2009, the Chinese Government pledged to renew the deal and the proceeds of the loan were to be used to upgrade Bangladesh's telephone networks to 3G, via Teletalk. TeleTalk, Bangladesh, Ltd. was selected to implement the project under the supervision of the Ministry of Post and Telecommunication, and it was expected that the project would increase TeleTalk's capacity to provide service to 4.73 million new 3G subscribers and 4.77 million new 2.5G GSM mobile subscribers. The originally planned completion date of the project was July 2010. However, the pipeline project encountered various delays. On December 27, 2010, Teletalk and CMEC signed a $216 million commercial contract for the Bangladesh 2.5G Network Expansion and 3G New Construction Project. Then, on June 9, 2011, China Eximbank and the Government of Bangladesh signed a $211 million preferential buyer’s credit (PBC) agreement for the 3G Technology and Expansion of 2.5G Network Project. The PBC (loan) carried the following borrowing terms: a 2% interest rate, a 19-year maturity, a 4-year grace period, and a 0.2% commitment fee. The borrower was expected to use the proceeds of the loan to partially finance the December 27, 2010 commercial contract between Teletalk and CMEC. According to the Government of Bangladesh’s Economic Relations Division (ERD), the loan had achieved a 83.4% disbursement rate ($176,043,000 out of $211 million) as of June 30, 2014 and a 100% disbursement rate ($211 million out of $211 million) as of June 30, 2021. The borrower had made repayments worth $72.531 million to the creditor as of June 30, 2021. Teletalk’s CMEC contract became effective on June 9, 2011, and construction officially commenced on January 6, 2012. Then, on October 15, 2012, Bangladeshi Prime Minister Sheikh Hasina inaugurated the 3G network. As of 2015, this project was completed and Teletalk reportedly saw significant increases in revenues and subscribers.