Escorts plans $150 million telecom investment

NEW DELHI - The telecom unit of Escorts Ltd, flagship of the diversified Escorts group, plans to raise $150 million to start cellular services in three states.

Escorts Telecommunications Ltd (ETL), a wholly owned company of New Delhi-based Escorts, has a license to offer cellular services in Rajasthan, Himachal Pradesh and a part of Uttar Pradesh.

ETL will fund its cellular foray through $75 million in debt and an equal amount in equity placements with a clutch of foreign investors who already have a strong presence in India's cellular sector.

"We've got International Finance Corp (IFC) to support this particular venture and other foreign investors are still being finalised," said Rajan Swaroop, chief executive officer of ETL.

"IFC will hold about 20 percent equity in Escorts Telecom."

Of the equity component of $75 million, the company hopes to raise about $30-40 million from foreign investors and the rest from Escorts Ltd.

India's booming cellular sector, which has more than 11.8 million users, has attracted a host of global firms such as Singapore Telecommunications that owns 16 percent stake in the country's largest cellular services firm, Bharti Tele-Ventures.

Another Escorts group firm, Escotel Mobile Communications Ltd, offers cellular services to 577,000 users in Kerala, Haryana and a slice of Uttar Pradesh.

Escotel, 49 percent owned by Hong Kong's First Pacific Co Ltd, recently sold its cellular license for Punjab to the Indian mobile unit of Hutchison Whampoa conglomerate.