New Delhi, March 22: Escorts Telecommunications will soon raise Rs 750 crore to fund its foray into cellular service operations.
The firm, a wholly-owned subsidiary of the diversified Escorts group, has a licence to offer cellular services in Rajasthan, Himachal Pradesh and a part of Uttar Pradesh.
“The entire fund-raising process should be complete in the next two to three months,” chief executive officer Ranjan Swaroop told The Telegraph.
Escotel, the group’s other telecom unit, which currently offers services in Kerala, Haryana and parts of western Uttar Pradesh, also plans to raise Rs 100 crore for operational activities.
Escorts Telecommunications (ETL) will raise half of the Rs 750 crore through debt placement and the rest through private equity placement. Of the equity component of Rs 375 crore, the firm hopes to raise about Rs 150-200 crore from foreign investors and the rest from Escorts Ltd.
Swaroop said the firm is yet to reach a final decision on the foreign investors but International Finance Corporation would buy a 20 per cent equity stake in ETL.
He said the Rs 100-crore investment plan in Escotel, which is separate from ETL, would be funded from internal accruals. “This would take around seven to eight months,” Swaroop said. Escotel currently has around 5,77,000 users.
Escotel recently sold its cellular licence for Punjab to the Indian mobile unit of Hutchison Whampoa conglomerate. Escotel is a joint venture between Escorts Ltd and Hong Kong’s First Pacific Co. First Pacific holds a 49 per cent stake in Escotel.
The country’s booming cellular sector, which has more than 11.8 million users, has attracted a host of global firms such as Singapore Telecommunications, which holds a 16 per cent stake in Bharti Televentures.
Other major players in the nine-year old domestic cellular market are Bharti Televentures, Hutch, the domestic unit of the Hutchison Whampoa conglomerate and Idea Cellular, partly owned by US firm AT&T Wireless Services Inc.