Bharti Launches Service In Bhopal

Bharti Telenet, the Madhya Pradesh basic telecom licensee, yesterday announced the launch of its transmission backbone between Bhopal and Indore, while starting its service in Bhopal. The company started its service in Indore in June and has some 3,000 subscribers there.

The Bhopal-Indore 197-km transmission backbone is part of a proposed 3,000-km optic fibre backbone planned in the state. Over 1,500 km of the backbone is already in place, according to a company press release. Besides Bhopal, it has also rolled out in neighbouring Mandideep, an industrial suburb.

The company is to roll out services in Raipur, Gwalior and Jabalpur early next year. At Bhopal, Bharti Telenet _ operating under the Airtel brand _ will offer 20,000 lines supported by an exchange, four base stations, three remote switching units, three digital loop carriers and 20 km of optic fibre loop to cover the entire local area of Bhopal.

Rajan Mittal, joint managing director of Bharti Telenet, said: "We have received encouraging response in Indore and are inspired to redouble our efforts. Bharti Telenet is committed to building a world-class telecom infrastructure in the state, which will make it the most sought after destination for business."

The first phase _ first to fifth year _ of Bharti Telenet is projected to cost Rs 1,350 crore, which will be funded Rs 630 crore through equity and Rs 720 crore debt. The Madhya Pradesh project is expected to cost some Rs 4,000 crore over 15 years, of which Rs 654 crore will be paid in licence fees.

A joint venture of the Delhi-based Mittals group and Telecom Italia, Bharti Telenet has already got Rs 450 crore equity in the company. Bharti Televentures _ the Bharti group's holding company for its telecom service ventures _ owns 51 per cent equity in the company, Bharti Telecom 19 per cent and Telecom Italia 30 per cent.

Industrial Development Bank of India (IDBI) has offered to sanction Rs 250 crore to the company, with the State Bank of India and the Industrial Infrastructure Development Finance Corporation together pitching in another Rs 250 crore. The project is expected to turn in an internal rate of return of 30 per cent in rupee terms.

With a subscriber base of 225,000 by the third year and up to two million by the end of the project, promoters expect equity valuations to be around $400-450 million (Rs 1,680-1,890 crore). Currently, the project is valued at about $50 million (Rs 210 crore).