IFC To Invest Around Rs 300 Crore In Escotel

Mumbai, July 30: | Updated: Jul 31 2002, 05:30am hrs
The International Finance Corporation, Washington (IFC) has submitted a term-sheet to the Escorts-promoted Escotel Mobile Communications with the intention of picking up a stake in the company. Though there are no official details on how much IFC will acquire, sources said the investment will be in the range of Rs 300 crore.

According to sources, the Rs 300-crore investment will be a combination of debt and equity. The term-sheet, it is learnt, has been submitted recently outlining the conditions under which the deal might go through. It was earlier reported in this paper that Escotel was looking to raise around $250 million (approximately Rs 1,200 crore) to fund its expansion plans for the cellular circles that it had acquired in the bid for the fourth operator. This investment was for a 49 per cent stake in Escotel. “Eventually, it will have to be a consortium of investors since it will be difficult for one investor to bring in that kind of money,” sources added.

When contacted Escotel CEO Manoj Kohli said: “I cannot comment on this.” At this stage, the foreign investor in Escotel is First Pacific Company Ltd of Hong Kong which holds a 49 per cent stake. First Pacific has been keen on exiting this investment for sometime now.

Over time, Escorts plans to create a new holding company called Estel in which the potential foreign investor can hold up to 49 per cent. Estel will be the holding company for Escotel Mobile Communications and Escorts Telecom. While Escotel Mobile will be for the existing circles, Escorts Telecom will overlook operations for the new cellular circles. The circles where the company provides cellular services are Kerala, Haryana and UP (West). In the bid for the fourth operator, Escotel was given the license to provide services in the circles of Punjab, UP (East), Rajasthan and Himachal Pradesh. While most other fourth operators have commenced services, there is no indication yet as to when Escotel will commence its services.