Birla AT&T to raise Rs 8.5 billion via private placement and initial public offering
(Wednesday, December 22, 1999)
Baiju Kalesh & Sangita Mehta in Mumbai
Birla AT&T, the cellular service provider in Maharashtra and Goa excluding Mumbai, has decided to raise around Rs 850 crore through a mix of private placement of equity and initial public offering.
The company has mandated JM Morgan Stanley for structuring the mobilisation, sources close to the Aditya Vikram Birla group said.
Birla AT&T is a 51:49 joint venture company of Rs 30,000 crore AV Birla group and US telecom giant AT&T.
Kumar Mangalam Birla, the AV Birla group chairman, said, "We are looking at various options to raise funds for the company," while confirming that JM Morgan Stanley has been given the mandate to raise the funds.
Sources said the company will use the funds to pay $50 million as licence fee to the Department of Telecommunication (DoT). The rest of the money will be used to retire high-cost foreign currency debt and expand its network in Maharashtra and Goa.
Sources said Birla AT&T to invest around Rs 2,000 crore including debt and vendor financing for future expansion. Till date, the company has already invested around Rs 900 crore.
The venture, which started operations in 1995, has a subscriber base of around 80,000.
Sources said Birla AT&T has charted out major plans including the launch of Internet service in the country.
As per the joint venture agreement, both Birla and AT&T have the right of refusal to start other telecom-related services in the country.
AT&T, one of the world's largest domestic and international long distance providers, recently expressed its bullishness on the telecom sector in India. The Union government has announced its decision to implement the National Long Distance Policy as early as 2000.
To give greater focus to the cellular business globally, AT&T has recently announced its intention to create a new wireless company christened AT&T Wireless Group.
According to a leading telecom analyst, "with this announcement in the US, it is expected that the US telecom major is expected to renew its interest in the Indian Telecom sector because of opportunities presented, arising out of the New Telecom Policy, 1999."
The plan to refocus on global wireless expansion could not have come at a better time, he added.(bs) |
