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Alcatel Telecom, part of the $32 billion French telecom major, Alcatel Alsthom, has extended a $50 million vendor financing package to Bharti Telenet, the basic service licence holder for Madhya Pradesh.

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Alcatel Telecom's Switching Systems Division President Raymond Polle has been quoted as saying that the repayment, which will be spread over six years, will begin only after a moratorium of two years.

Alcatel is supplying the switches for the basic telecom services network of Bharti Telenet, which launched its commercial services at Indore on Thursday, making it the first private telecom company in India to do so.

In addition to Alcatel, it is understood that US-based Motorola is also extending a vendor-financing package of a similar amount to Bharti Telenet. And Motorola is supplying the wireless equipment.

As part of the agreement with Bharti Telenet, Alcatel will supply switches capable of supporting 221,000 lines over three years.

It has already supplied and installed switches that are capable of handling 26,000 lines.

Alcatel's $50 million vendor financing package for Bharti Telenet is probably the second such deal extended to the private basic telecom service providers in the country.

Late last year, Tata Lucent Technologies extended vendor financing to Tata Teleservices, the basic service licence holder for Andhra Pradesh.

Alcatel had earlier extended a similar package to Koshika Telecom, the cellular service provider in UP (West), UP (East), Bihar and Orissa.

As part of the deal, Alcatel had even picked up a minority stake of 3 per cent in the company.

It is at present implementing GSM networks for Koshika Telecom in all the four circles with the first phase of the network including mobile switching systems, GSM radio base stations and microwave transmission networks in 42 cities and highways.

Bharti Telenet is a joint venture between Bharti Televentures, Bharti Telecom and Telecom Italia.

Bharti Televentures holds a 51 per cent stake in the company; Bharti Telecom holds a 19 per cent stake and the balance 30 per cent being vested with Telecom Italia. Bharti Televentures in turn is a 80:20 joint venture between Bharti Telecom and Stet of Italy.

Alcatel is also interested in aggressively extending vendor credit to private basic and cellular operators to improve market share.

According to Raymond Polle, the company will pick up a minority stake of less than 10 per cent in the ventures if it is necessary to bag contracts.

"Vendor financing is the key to gaining market share and we are just complying with market conditions,'' said Polle.

He, however, added that before extending credit or picking up a minority stake, the company would study the business case and its project viability.

According to Polle, Alcatel is at present in an advanced stage of negotiations with about three private operators in the country for supplying its switching systems.

- Compiled from the Indian media

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