China Eximbank contributes to EUR 128 million syndicated loan to Telekom Srbija for Phase 2 of the Fixed Network ALL-IP Modernization Project (Linked to Record ID#100775)

Project narrative

On June 18, 2016, China Eximbank (CEXIM) and the Government of the Republic of Serbia’s Ministry of Finance signed a Memorandum of Understanding (MOU) regarding Phase 2 of the Fixed Network ALL-IP Modernization Project. During the same month, Telekom Srbija (Telekom Srbija a.d. Beograd) — a Serbian state-owned telecommunications company headquartered in Belgrade — signed a framework agreement with Huawei as the contractor of the project. Then, on May 12, 2017, CEXIM and Bank of China (BoC) signed an EUR 128 million EUR syndicated loan agreement with Telekom Srbija for Phase 2 of the Fixed Network ALL-IP Modernization Project. The loan carries a 10 year maturity. Its interest rate and grace period are unknown. As of December 31, 2019, the principal amount outstanding under the loan was EUR 43 million. The proceeds of the loan were used by the borrower to finance approximately 85% of the total cost of a commercial contract with Huawei worth approximately EUR 150 million. The expected duration of the commercial contract is three and a half years from the date of signature of the first purchase order or financing contract, whichever is more recent. The purpose of this project is to increase fast, stable and secure internet access through the laying of fiber optic cable. The project officially commenced on October 5, 2016. By 2019, the project had resulted in the laying of 4,000 km of fiber optic cable and it was on track to provide fast, stable and secure internet access to more than 700,000 households by the end of 2019. As of October 2020, the second phase of the project was still undergoing implementation. Record ID#67014 captures the estimated financial commitment of China Eximbank, while Record ID#100775 captures the estimated financial commitment of Bank of China.