The debt will be provided on a project finance basis with a term of 18 months. This is the largest non-recourse facility for a start-up telecommunications project in the region, and one of the largest in South Africa to date. Attractive terms for the debt have been offered by the financial institutions to ensure that Neotel is allowed adequate time to establish itself in the market.

Neotel will re-finance the debt with a long-term facility after 12 months. Nedbank Capital, Investec and the Development Bank of South Africa have been appointed as the mandated lead arrangers for the long-term facility, which will be in excess of R4 billion. The debt is complemented by in excess of R2 billion of equity that will be contributed by the Neotel shareholders.

The funds will be utilised for Neotel's network build out. The Neotel network already consists of 1,300 km of optic fiber cable in the six main metropolitan areas. This infrastructure was purchased from Transnet for R256 million earlier this year.

Neotel currently offers international voice and data transit services for other telecommunications operators. The roll out of additional services is on track and initial enterprise services will be available in December this year. Consumer services in select geographic areas will be offered in April / May 2007.

Ajay Pandey, managing director of Neotel, said that he was delighted to have Neotel partner with such a reputable funding consortium. The finalisation of the funding ensures that Neotel continues to remain on track with the roll out of its promised services.

Nedbank Capital, Investec and the Development Bank of South Africa added that they were very pleased to be participating in an innovative and flexible funding structure that is responsive to the needs of Neotel and its shareholders. The consortium added that they believe that Neotel will bring world-class telecommunication innovation to South Africa through the roll-out of a next generation network coupled with the involvement of Videsh Sanchar Nigam Limited of India, one of the world's leading telecommunications service providers.

Mike Peo, head of Nedbank Capital's Infrastructure Project Finance team, said that today's signing is a notable achievement on the South African telecommunications landscape, finally enabling South Africa's second network operator to come to market, and Nedbank Capital is proud to have played a significant role in this funding. "The roll-out of the Neotel network is a fundamentally important milestone in creating a fully competitive market for telecommunications services in South Africa, with all South Africans standing to benefit," said Peo.