New Delhi, July 16: Sistema Shyam TeleServices, a joint venture between Russia’s Sistema and the Shyam group, has signed a $70-million loan agreement with the Bank of China to fund its network expansion programme.

The company will use the money to procure equipment from China’s ZTE for its CDMA network. The loan is for eight years with a three-year moratorium on principal repayment.

“Sistema Shyam has signed a $70-million agreement with the Bank of China to facilitate investments to augment the wireless infrastructure of its mobile services network in India under the MTS brand,” said Sergey Savchenko, chief financial officer of the company.

Sistema Shyam has over 1.35 million subscribers in six circles — Tamil Nadu, Kerala, Rajasthan, Calcutta, Bengal and Bihar.

“Our immediate and near-term ambition is to fully roll out our services on a pan-India level by 2010,” said Vsevolod Rozanov, president and CEO of Sistema Shyam.

Of the total capital expenditure plan of $5.5 billion, the company has, so far, invested about $1.2 billion in spectrum purchase and infrastructure.

Savchenko said, “The deal with the Bank of China is one of the many steps that we are taking to add impetus to our plans of establishing the MTS brand in India and differentiate positioning on parameters of robust infrastructure and quality network.”

Recently, the company launched its services in Bihar and is planning to invest more than $180 million to develop infrastructure and services in the state.

The company also plans to foray into data services later this year. Data services make up around 8 per cent of an operator’s revenue.

Earlier this year, Sistema Shyam had entered into a tie-up with Russia’s Mobile TeleSystems to offer services under the MTS brand.

It is the only new entrant having a licence to operate in all the 22 telecom circles of India.