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. Last Updated: 07/27/2016

Svyazinvest Gets $128M for Upgrades

State-owned Sberbank said Monday it was extending a 4 billion ruble ($127.8 million) loan to Svyazinvest to upgrade the networks of the telecom holding's seven regional operators.

The five-year loan marks the latest foray of the country's largest bank into retail lending.

"Today's event is important for both Sberbank and Svyazinvest," said Andrei Kozmin, president and chairman of Sberbank. "It is in line with Sberbank's policy of developing relations with the largest clients."

Sberbank did not disclose the interest rate attached to the loan. Anton Osipchuk, first deputy general director at Svyazinvest, said only that the holding had found the rate satisfactory.

Svyazinvest officials said a deal with RTC Leasing -- under which it will act as the holding's middleman with equipment suppliers -- will cut the cost of equipment bought with the loan by 15 percent. RTC is 27 percent owned by long-distance operator Rostelecom, which is 51 percent owned by Svyazinvest.

"Thanks to Sberbank we have received access to a long-term ruble financing source and, together with the discounts, this will allow us to buy 20 percent to 25 percent more equipment than planned with the same amount of spending," Osipchuk said.

Svyazinvest has been upgrading its subsidiaries' aging networks and adding nontraditional services for several years. The subsidiaries sank $680 million into development in 2001 and $800 million more is to be invested this year, Osipchuk said.

Yashin said Svyazinvest was looking to hike tariffs to bring a return on the investments.

Analysts said tariff increases are vital to Svyazinvest's development.

"It's unknown if they are going to receive a significant portion of their revenues from new services, with competition already there in some of the regions," said Andrei Bogdanov, a telecoms analyst at Alfa Bank. "The important thing is tariff reform."

Meanwhile, Communications Minister Leonid Reiman said at the loan-signing ceremony Monday that 2.5 million new telephone lines will be installed this year.