Tata Tele Gets Fipb Nod To Up Foreign Equity To 49%

The foreign investment promotion board (FIPB) has cleared a proposal of Tata Teleservices Ltd to hike foreign equity in the company from 20 per cent to 49 per cent amounting to Rs 735 crore. The company holds the letter of intent for operating basic telecom services in Andhra Pradesh.

The proposal will be referred to the cabinet committee on foreign investments. The department of telecommunications had given its approval to the proposal at the FIPB meeting.

Tata executives said the hike in foreign equity did not involve a sale of equity, but was just a correction of an earlier proposal which the FIPB had cleared before the telecom bidding process two years back.

 

Then (in 1995), we had proposed a 20 per cent foreign holding because we were not sure what the final structure would be. We had bid for several circles and were not sure which we would win. We had even taken a clearance for an equity of Rs 3,000 crore, a Tata executive said.

The present proposal takes care of the requirements of the Andhra Pradesh basic telecom project. The revised paid up capital of the company is pegged at Rs 1,500 crore.

Of the 49 per cent foreign equity holding, 39 per cent will be held by Bell Canada and 10 per cent by the Amercian International Group (AIG). On the basis of present equity, the Canadian company will make a commitment of Rs 585 crore and AIG Rs 150 crore.

The company is finalising equipment supply from global telecom vendors. It had floated a nine-part request for proposals from vendors for equipment ranging from microwave radio to exchanges. The company is also working on a financing plan for the project which is expects to sew up later this year.

The Tatas also hold the cellular services licence in Andhra Pradesh. The company, christened Tata Cellular, has started offering cellular services to customers in the state and is expected to raise debt for the project soon.