Escotel Mobile Communications’ chief executive officer Manoj Kohli said, “We are talking to a few investors at this stage.” Mr Kohli, however, was unwilling to elaborate on the specific parties involved. An announcement from the company on the deal is expected shortly.
Escotel provides cellular services in the circles of Kerala, Haryana and Uttar Pradesh (West). At this stage, Escotel is a joint venture between Escorts Limited and foreign partner First Pacific Company Limited of Hong Kong. The foreign partner holds 49 per cent stake in the venture.
First Pacific has been keen on diluting its investment in Escotel for a while now. It is expected that the potential investors will acquire First Pacific’s 49 per cent stake in Escotel. Foreign investments in the telecom sector, as per government regulations, cannot exceed 49 per cent.
“Discussions between Escotel and the potential investors have been in progress for a few weeks now,” sources said. According to them, the $250 million investment will most likely come from all three parties involved. “It will be difficult for one investor to put in that kind of money,” explained sources.
In the fourth round of bidding, the company acquired licences for Punjab, Uttar Pradesh (East), Rajasthan and Himachal Pradesh. The fresh fund infusion is expected to cater to the network construction costs for these new circles.
Escotel is the market leader in all the circles where it provides cellular services. According to figures released by the Cellular Operators Association of India (COAI) for March 2002, Escotel has a subscriber base in excess of 2,15,000 for the Kerala circle. This accounts for around 60 per cent of the market. It is also the leader in Haryana where it has a market share of over 80 per cent. The other player in the circle is the Essar- promoted brand Aircell. Escotel has a subscriber base of over 2,00,000 in the UP (West) circle.