Bharti Telenet, a 70:30 joint venture between the Delhi-based Bharti group and Telecom Italia, is all set to launch the country's first private basic telecom service in Madhya Pradesh on June 4, Sunil Mittal, chairman and group managing director of the Bharti Enterprises, announced here yesterday.
The company will start offering a "better" service which will offer bulk discounts to corporate and high-usage customers and, at the same time, intends to deliver service at a quality superior to that of the department of telecommunications (DoT, the country's incumbent provider). It will start service in Indore first and plans to expand to Bhopal, Raipur and Gwalior before the end of the calendar year.
Jabalpur is expected to be added to its network _ project cost for the first three years: Rs 1,350 crore _ early next year. Mittal said the first year would end with 26,000 customers on its network, which by the end of year two would increase to about 150,000.
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Bharti Telenet is implementing a wireless-wireline hybrid network in Madhya Pradesh for the first time in the country. "It (the first phone call made on the network) is going to be a curtain raiser for things to come in the country. It will mark the beginning of the last phase of the telecom privatisation exercise when actually a (basic) telecom operator will start offering services along with DoT," felt Mittal.
"We will shadow the DoT tariffs, although we will offer finer rates as the usage increases," said a company executive.
Mittal added that he expected the revenue-break up of Bharti Telenet to be similar to that of DoT.
"About 20 per cent of DoT customers account for 80 per cent its revenues. In our case, in the initial years, the contribution from business customers will be more, but later it will become more or less even with DoT," he predicted.
Bharti Telenet is going into financial closure, the stage when a project has tied up all sources of equity and debt funds. This follows debt offers of some Rs 900 crore from the Industrial Development Bank of India, Infrastructure Development Finance Corporation and State Bank of India.
The loan agreements with the institutions and banks are expected to be finalised soon making the company the first basic telecom project to go into financial closure. The contracts will meet the requirements of the project's first phase (first year to fifth) costing Rs 1,350 crore, to be entirely funded through rupee borrowings and equity.
IDBI has offered to sanction Rs 250 crore to the company, with SBI and IDFC together pitching in another Rs 250 crore. The vendor credit _ backed by equipment suppliers Alcatel and Motorola _ is being provided by ANZ Grindlays and Banque Nationale de Paris.
The first phase of Bharti Telenet is projected to cost Rs 1,350 crore, which will be funded Rs 630 crore through equity and Rs 720 crore debt. Sources said the interest rate on the debt is likely to be set between 16 and 17 per cent. Bharti Televentures _ the group's holding company for its telecom service ventures _ owns 51 per cent equity in the company, Bharti Telecom 19 per cent and Telecom Italia 30 per cent.
The Madhya Pradesh project is expected to cost Bharti Telenet some Rs 4,000 crore over 15 years, of which Rs 654 crore will be paid to the Union government in licence fees. The project has been structured into three phases: the first phase running from years one to five, second six to ten and third 11 to 15.