Zapp secures 94m-dollar loan to expand its business

Telemobil, which operates the only mobile telephone network in Romania that uses the American CDMA 450 system and is the owner of the Zapp brand, has secured a 94 million dollar (72.2 million euro) loan from a syndicate of several European and American banks, after ending the last fiscal year with double revenues and no losses.

Zapp will receive 40 million dollars (30.7 million euros) from Bank Austria and HVB Romania, and 54 million dollars (41.5 million euros) from Ex-Im Bank (through Citibank) and the Black Sea Trade Development Bank.

“This is the biggest loan to the CDMA 450 industry worldwide and is surely one of the biggest for Romanian telecoms,” Piermario Di Pietro, Zapp’s chief financial officer, told Ziarul Financiar. We now have the money to achieve our goals: matching the coverage area (the area in which mobile phones can be used) of GSM, new services – such as roaming everywhere in the world – and pre-paid cards to increase our customer base,” the Telemobil official added.

Zapp received a loan to buy equipment from Lucent Technologies in 2002 and at the end of 2003 got a further loan of 20 million dollars (16.6 million euros) from Citibank Romania. The next step was taken mid last year when Telemobil obtained 35 million dollars from Citibank for investment in its national network.

The operator got the new loan after almost two years of talks, during which the banks monitored its financial performance. Zapp achieved total revenues of 93 million dollars (71.5 million euros) in 2004, with an operating income of around one million dollars (770,000 euros), according to Piermario Di Pietro. Telemobil hopes to turn in net profits this year for the first time.

Its revenues for 2003 reached 52 million dollars (39.1 million euros), four times more than in 2002. Its number of customers has increased at a similar pace: while Zapp had less than 100,000 subscribers at the end of 2002, a year later it was on its way to 200,000, and by 2004 had overshot the 250,000 mark. “We now have almost 290,000 customers,” Piermario Di Pietro specified. As yet Zapp does not have a pre-paid card system in place, with all its clients being post-paid subscribers, mostly from business.

This is the first time in the company’s history that a loan is granted, not due to intervention by its shareholders or a technology supplier (as in the case of Lucent Technologies), but as a result of the company’s performance, Zapp officials explained.
dan.dragomir@zf.ro