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Reliance readies telecom finance

The company is into the last lap of tying up institutional finance.

Reliance Telecom has pegged the total fund requirement for its telecom venture at Rs 35.4 billion up to March 31, 2004.

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This includes cellular and the basic telecom services.

Of the Rs 35.4 billion, the basic services (Gujarat circle) will have the total funding of Rs 25.6 billion, and the cellular project Rs 9.8 billion only.

The cellular project includes 7 circles of Madhya Pradesh, West Bengal, Himachal Pradesh, Orissa, Bihar, Assam and the Northeast.

Reliance Industries and its associates and Nynex of US, that has now merged with Bell Atlantic, will promote and arrange the equity of the project.

Nynex, which is the foreign partner, can have up to 49 per cent equity in Reliance Telecom.

Reliance Telecom has fixed up the means of finance as follows: Promoters' equity is expected to bring in Rs 10.4 billion, while revenue from internal accruals is estimated at Rs 10.8 billion. The security deposits are at Rs 3.2 billion, while the working capital borrowings are pegged at Rs 1 billion.

The company expects to raise Rs 10 billion through infrastructure bonds. The means of finance will take care of both the telecom projects.

It should be noted that the company had issued a tranche of the 10(23G) bonds last year, and mopped up over Rs 6 billion from the market.

Of the seven cellular circles for which Reliance Telecom has bagged, it has started services in all the circles except in Himachal Pradesh and the Northeast. It has covered Guwahati in Assam; Silguri, Darjeeling and Durgapur in West Bengal; Indore, Dewas, Ujjain, Bhopal and few other places in Madhya Pradesh; Gaya, Hazaribagh, Patna, Ranchi, among others in Bihar.

At a very low price, Reliance Telecom has got nearly 1.3 million square kilometres of the total area of the country under its cellular coverage which is as high as 36 per cent of the country's area.

It will cover the population of approximately 350 million, a third of India's population. What is again unique is that it has selected the territory that has a very low level of penetration of telephones compared to the average national coverage, thus making it ideal for the cost-effective roll out of the cellular networks.

For the basic services, the vendor negotiation is still in the advanced stage of negotiations and the rollout of these operations is scheduled in the current calendar year.

- Compiled from the Indian media

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