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|November 3, 1998
Hughes Network Systems and the Ispat Group are promoters of Hughes Ispat, the first basic private telephony company in the Maharashtra telecom circle. They recently began operations.
The US Exim Bank action followed the US government's anti-nukes sanctions in May.
Company officials say they now expect the financing to go through early next year.
The Hughes Ispat project is expected to cost between $1 billion and $1.2 billion over the initial three years of the project. The company is currently capitalised at $180 million with another $70 million extended in short-term loans by equipment vendors.
The 'peak equity requirement' of $330 million is expected to be pumped in by the third year.
(The peak equity requirement of a project represents the maximum equity needed to fund a project and, usually, is to be met in the initial years when revenues from the project are low and losses are high. After that, when the revenues start accruing to the project, the cash flows take care of the losses and expenses).
By the end of the third year, Hughes Ispat hopes to have a capacity between 500,000 and 600,000 lines. By the end of the 15-year licence period, it is projecting a capacity of 3.5 million lines.
Hughes Ispat commenced services in the state on October 30. It has become the second basic telecom licensee after Bharti Telenet in Madhya Pradesh to start offering services in the country.
Bharti Telenet started services on June 4 this year. The company is a joint venture between the Delhi-based Bharti group of companies and STET of Italy.
Four other companies - Reliance Telecom in Gujarat, Tata Teleservices in Andhra Pradesh, Essar Commission in Punjab and Telelink Network in Rajasthan - have signed licence agreements but are yet to start services.
Tata Teleservices and Reliance Telecom hope to start services early next year although the latter has not finalised an equipment vendor for its network in Gujarat.
Essar Commission is also yet to finalise an equipment vendor for its telecom operating licence in Punjab.
On September 30, HIL signed the licence and interconnect agreements with the Department of Telecommunications and paid the first instalment of licence fees amounting to Rs 3.97 billion. It has, however, not signed the pacts for Karnataka, the second circle it holds a letter of intent in. It has committed to pay Rs 139.09 billion in licence fees to the government over 15 years.
- Compiled from the Indian media
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