Foreign partners to bring more equity to Hughes Tele.com

By K. T. Jagannathan

MUMBAI, MAY 16 The overseas promoters of Hughes Tele.com (India), the licence holder for basic telephone services in Maharashtra and Goa, are expected to infuse fresh equity of $30 million into the company soon.

Disclosing this, Mr. Prakash Bajpai, president and chief executive officer, said the Indian promoter - Ispat Group - would decide on bringing in more equity in the next few days. Hughes Electronics Corporation had already committed an additional $30 million equity to the Indian venture.

The process of deploying fresh equity is sought to be hastened so as to ensure that the nearly $750-million project of Hughes Tele.com achieves financial closure by July. The project will have an equity component of $350 million and a debt portion of $400 million. The Indian promoter holds a majority 51 per cent equity and the balance is held by Hughes Electronics Corporation and Alltel Corporation of the U.S. At a later stage, Mr. Bajpai said the company might come out with an IPO (initial public offering).

Mr. Bajpai said the entire debt would be raised within the country. The company had already got underwriting commitments from ICICI for $220 million. With ICICI commitment, he expected no problems for the promoters to raise vendor financing.

He was confident that the company would reach the break-even level by 2003 by which time it would also have a subscriber base of 2.5-3 lakhs.

The company has just roped in Lucent Technologies of the U.S. to provide the needed technical expertise and other related services to build the country's first genuine broadband telephone network.

Focussing initially on providing broadband access, Hughes Tele.com, Mr. Bajpai said, would move on to become a super ISP (Internet service provider). Subsequently, the company would concentrate on creating the security environment for its services. The objective ultimately was to provide a host of value-added services to its customers, he pointed out.

Typically, Hughes was planning to provide optical fibre connectivity right up to the premises of its customers. This was expected to facilitate high speed communication, provide bandwidth on demand and offer more security to service users. In a country where surfing the Net itself was proving a difficult job, investment in bandwidth technology was a sine qua non for improving access by its clients, he pointed out.

Mr. Bajpai said Hughes Tele.com would focus on business and commercial clients - the so-called high usage customers - and accordingly identified 36 grids (or areas) in Mumbai. He expected the whole broadband telephone network to be in place by the second quarter of this year. He said he would be more than happy if Hughes Tele.com could garner 10 per cent of the nearly Rs. 3,500-crore revenue that the MTNL was realising in the Mumbai region alone in the first year.

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Section  : Business
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