Hughes Tele.Com Ready To Float Rs 750 Cr Ipo

Hughes Tele.com has decided to float an initial public offering of Rs 750 crore, the largest so far in the telecom sector. The company filed the offer document with Securities and Exchange Board of India yesterday.

The telecom major is a joint venture between the US-based Hughes Electronics and Alltel Corporation and Ispat Industries.

The issue, to be co-lead managed by Kotak Mahindra Capital and ICICI, will have book-built and retail portions at the same price.

HTL holds the telecom licence for the Maharashtra circle, which also covers Goa. The company plans to utilise the proceeds of the issue to fund its broad-band telecom network project covering major cities in the two states.

Another group company, Hughes Software, tapped the market with a Rs 260 crore IPO in October 1999, mopping up Rs 7,840 crore.

HTL president and chief executive P C Bajpai said, "Sebi takes four to six weeks to vet offer documents. With this offer, we will be able to offer broad-band services across the board.

"We are excited about the tremendous opportunity to provide a superior and comprehensive suite of telephone and Internet services, which include last-mile optical fibre access," he said.

The Hughes IPO will be the third-largest issue during the last 10 years, after Industrial Development Bank of India's Rs 2,340 crore and Essar Oil's Rs 2,000 crore issues in 1994 and 1995 respectively.

The total cost of the broad-band project has been pegged at $750 million, or Rs 3,600 crore. It entails an equity component of $330 million.

While a part of the equity, worth $150 million, has already been brought in, the balance will be raised from the public issue and an additional infusion of $30 million from Hughes. ICICI has underwritten about Rs 1,000 crore of the debt component of the issue.

Lucent Technologies, which recently signed a $175 million contract with Hughes Telecom, has also offered a suppliers' credit to the project.

HTL is planning to construct, operate and maintain a network that will ultimately provide more than 5 million lines.