BPL looking at partner to raise expansion funds

May launch IPO after merging BPL Mobile, Cellular.

BPL Communications is looking at roping in a strategic partner or a financial investor to raise funds for expansion.

Alternatively, the company is planning an initial public offer after merging its subsidiaries, BPL Mobile and BPL Cellular, in the next 10-18 months.

Sandip Basu, president and chief executive officer, BPL Mobile, said at a media conference in Mumbai today: "We are looking at bringing in a strategic partner to consolidate our position. We will also be looking at merging our two companies, BPL Mobile and BPL Cellular, to have a more flexible setup. If there is a joint vehicle, it will be simpler and faster to get bilateral agreements."

The company is expected to take a final decision in the next 10-18 months. "The two companies have synergy of operations. They also have one CEO," Basu added.

The funds raised will be used for the inorganic growth of the company, including acquisition of new telecom circles.

Basu said BPL Communications could offload up to 49 per cent to a strategic partner. The company holds a 74 per cent stake in BPL Mobile. France Telecom holds the remaining 26 per cent.

BPL Cellular, which operates in the circles of Maharashtra-Goa, Kerala, and Tamil Nadu-Pondicherry, has reduced its debt by Rs 400 crore in the current financial year, by converting it into preferential shares.

"The Rs 400 crore reduction in debt has brought down our average cost of borrowing from around 14 per cent to 7.5 per cent," Basu said.

The company has an outstanding debt of Rs 1,300 crore.

BPL Mobile has also announced a capital expenditure of Rs 300 crore for building its network and infrastructure in the next six months.

In a presentation to mediapersons, Basu said the company would use the money to instal three mobile switching centres, two intelligent networks, add 350 base transceiver stations and increase switching capacity across its circles.

It is also planning to upgrade its network by extending GPRS technology to Maharashtra, Goa, Kerala and Tamil Nadu, and is also in an advanced stage of testing its EDGE technology platform in Mumbai.

Krishna Angara, executive vice-president (business operations), BPL Mobile, said the company would focus particularly on the women and youth segments because of their high growth potential. The company is planning to increase its subscriber base to 3 million by March 2005.