ZTE provides $100 million supplier's credit -- via deferred payment facility -- to Telkom Indonesia for acquisition of telecommunications equipment

On August 20, 2009, PT Telkom Indonesia (Persero) Tbk (Telkom Indonesia) — a state-owned telecommunications company in Indonesia — signed a $100 million deferred payment (vendor financing) facility with ZTE Corporation to facilitate the acquisition of telecommunications equipment. The purpose of the purchased equipment was to facilitate the implementation a telecommunications project with ZTE Corporation. The facility carried an interest rate of 6-month LIBOR plus a 1.5% margin and it was scheduled for semi-annual repayment between February 11, 2014 and June 15, 2016. The facility was unsecured (i.e. not collateralized). The borrower was to use the proceeds from the facility to finance 85% of the total cost of its project (commercial contract) with ZTE Corporation. While there is evidence that telecommunications equipment was procured from ZTE Corporation, precise project implementation start and end dates are unknown.

Additional details

1. PT Telkom Indonesia (Persero) Tbk, also simply known as Telkom and Telkom Indonesia, is an Indonesian multinational telecommunications conglomerate. Telkom is listed on the Indonesia Stock Exchange and has a secondary listing on the New York Stock Exchange. The government of Indonesia owns over half of Telkom's shares outstanding. 2. The all-in interest rate that applies to the facility (2.343%) was estimated by taking the average 6-month LIBOR rate in August 2009 (0.843%) and adding a 1.5% margin.

Number of official sources

1

Number of total sources

2