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Hughes Tele.com to achieve financial closure by December

NetScribes/Ganesh Ramamoorthy

Hughes Tele.com is on its way to become the first private sector basic telephony service provider to achieve financial closure. The company is set to achieve this feat by December 31 for its Rs 35-billion broadband project.

Speaking to NetScribes, Kishore Saletore, treasurer of Hughes Tele.com, said that the company has tied up all the debt and equity components for the project. The Rs 35-billion project will have an equity component of Rs 15.5 billion and a debt component of Rs 19.5 billion.

The promoters' contribution to the equity stands at Rs 6.67 billion, while another Rs 8.86 billion has been raised through the capital market.

In the case of the debt component, ICICI, which has underwritten up to Rs 8.54 billion, has taken Rs 3.5 billion on its own books, of which it has already disbursed Rs 2.2 billion. It is expected to disburse Rs 1.2 billion by the first week of December. Hughes will also raise Rs 5 billion through nine-year non-convertible bonds at a coupon rate of 14-16 per cent.

The company has appointed Deutsche Bank for lead arranging the rupee debt. The dollar component is expected to be minimal.

"Most of our payments are in rupees. So, the dollar component is not really required. Even if there is a dollar debt, it will be in the range of $30-50 million," Saletore said. "As of now, we are watching the rupee-dollar rates and will take a decision on the dollar debt by this weekend."

Of the Rs 10.5-billion vendor debt, switching and transmission equipment supplier Lucent will provide up to Rs 7.5 billion, and implementer Hughes Network Systems will provide the rest.

"The rest of the debt part will come in after the bank syndication process gets over," Kishore said.

Hughes Tele.com, which is hoping to become EBITDA-positive by March 31, 2002, will have a total debt servicing cost of Rs 1 billion. However, the company will still be incurring a net loss of Rs 2.21 billion on a projected total income of Rs 1.85 billion during FY02.

The Hughes Tele.com stock, which listed on the Bombay Stock Exchange in September at Rs 12, is currently trading below its IPO price. The scrip closed at Rs 11.45 on Tuesday, up Re 0.15 from its previous close with a volume of 316,694 shares.

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