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A Staff Writer in Bombay

Hughes Ispat Limited, the $330 million joint venture in India has delayed the launch of its basic telephone services in the country to sometime in November or December.

The trouble seems to be the US and Japanese anti-nukes sanctions against India. HIL was to raise the $600 million that it requires for starting the services from Japanese and US exim banks. Both nations have strong anti-nukes policies.

Now the fund raising exercise has run into procedural hassles.

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When the government decided to let private companies into the basic telephony business, HIL won 15-year licenses for running fixed-line services in the states of Maharashtra and Karnataka.

"We are looking at getting into revenue (generating) services in the cities of Bombay and Pune before the year is out... We hope to have 10,000 phones working by then," HIL CEO Raju Patel has been quoted as saying by news agency Reuters.

Bombay and Pune are in Maharashtra. His plans for Karnataka, however, are not very clear. The capital of Karnataka is Bangalore, home to several large information technology companies. The city has been billed as the Silicon Valley of the East.

HIL is still awaiting key concessions from the government before starting operations in Karnataka, he says.

Faced with tough alternatives, the company has turned to the government's Department of Telecommunications for help. "There has been a problem in financing the project though the Department of Telecommunications does not feel so and it is not willing to give us concessions," Patel is reported to have said.

Three companies own Hughes Ispat's equity base. Nippon Denro Ispat Limited holds 51 per cent. Hughes Electronics, a unit of General Motors Corp, has 25.5 per cent. And ALLTEL Corp owns 13.5 per cent.

HIL had placed a $200 million order with Japan's NEC Corp. for switching and transmission equipment and an order for some $300 million with Hughes Electronics for wireless radio equipment.

Hughes Ispat is also in the process of finalising loans and is trying to raise much more rupee debt through Indian financial institutions, Patel has explained.

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