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Tata Teleservices to raise $500 million equity

It will also raise a matching amount through the debt route.

The Indian equity will come from the Tatas while the foreign equity will come from Bell Canada and global investment funds such as the American Insurance Group and the International Finance Corporation.

The initial public offering route is being considered as an option to raise equity, M Z A Baig, director, Tata Teleservices, said. The private placement option is also being considered.

Shares of Tata Teleservices may be privately placed with companies interested in availing themselves of capital gains benefits since telecom has been given infrastructure status.

Baig said these avenues are being considered as the Tatas would not be able to raise the funds required for the Indian equity on their own.

The company has decided to use only the wireless in local loop technology during the first year to ensure a quick takeoff from the block.

Within WLL, it would use the code division multiple access or CDMA technology, Baig said. By the end of the third year, the ratio of wireless to wired connections is expected to be around 70:30.

Gradually, more wired connections would be set up since heavy data transmission for applications such as ATMs, online banking etc, required powerful wired networks, he pointed out.

When Tata Teleservices signs the licence agreement, it will have to spend Rs 1.2 billion as licence fees for the first year. The total amount to be paid is Rs 42 billion over a 15- year period.

Along with DoT, Tata Teleservices will have a waiting list of over 140,000 - as of last year - to service according to DoT estimates.

- Compiled from the Indian media

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