Business Standard

Telecom Department Told To Decide On Railtel Stake Soon

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Subhomoy Bhattacharjee BUSINESS STANDARD

The Railway ministry has asked the department of telecommunications (DoT) to decide within this week whether Mahanagar Telephone Nigam Ltd (MTNL) will go ahead with a proposal to pick up equity in Railtel Corporation.

The ministry told DoT that Railtel had emerged as a viable entity and was now in a position to seek other shareholders if MTNL decided to back out, government sources said. At stake is a 34 per cent share in the corporation for about Rs 340 crore.

Railtel is involved in a venture to lay optical fibre cables along railway lines across the country.

The communication backbone will not only be used by the Railways, it will also be leased to telecom companies seeking to augment their national long-distance infrastructure.

 

However, Railtel has been unable to look for an alternative shareholder as it is constrained by a 2001 Cabinet decision to rope in DoT as an equity partner in the project.

The corporation had laid optical fibre cables over 19,600 route km of the Railways, of which almost half had been energised, AK Chopra, managing director, Railtel, said.

He said several telecom players, including the Birla-Tata-AT&T combine, Bharti Tele-Ventures and Hutchison, had taken substantial portions of the network on lease.

Moreover, British Gas, GAIL and Software Technology Park of India had signed lease agreements for the Mumbai-Ahmedabad section of the project. These deals had netted the company Rs 9 crore, Chopra added.

Chopra said Railtel was also exploring the possibility of raising a Rs 450-crore loan from the State Bank of India in this financial year to fund its investment needs. However, it could not go ahead till a final decision on the equity issue was taken.

The company expected to invest about Rs 500 crore in 2003-04 compared to Rs 130 crore in the last financial year, he added.

Since most of the work on the network would be completed in 2003-04, Chopra said, the company would need to invest only about Rs 1,200 crore over the next five years.

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First Published: Apr 28 2003 | 12:00 AM IST

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