Date:07/11/2009 URL: http://www.thehindubusinessline.com/2009/11/07/stories/2009110751620400.htm

Back S Tel gets Rs 953-cr funding from 8 banks

Achieves financial closure of its GSM project.

Our Bureau

New Delhi, Nov. 6 S Tel Pvt Ltd, one of the new entrants in the Indian GSM space, has announced that it has accomplished financial closure of its project with Rs 2,000-crore outlay. Eight major public sector banks led by IDBI have come forward to provide the Rs 953-crore long-term funding of nine years to the company. The consortium of banks includes State Bank of India, Canara Bank, Punjab National Bank, Central Bank of India, Union Bank of India, Allahabad Bank and Bank of Baroda. In addition, the promoters, Siva Group as well as Batelco, have already brought in the equity capital of Rs 1,253 crore.

Commenting on the debt allocation to S Tel, Mr B. K. Batra, Executive Director and Group Head – Corporate Banking, IDBI Bank Ltd, said, “We understand that Category C telecom circles have high potential for connecting large masses of India while also making business sense due to a huge untapped, less penetrated market. S Tel’s sound business strategy and operating model with a focus on these markets are the key parameters for allocating this long-term financial funding. Besides, the combined backing of strong Indian and overseas promoter groups, Siva Group as well as Batelco, played an important role in our decision.”

Services in six circles

Mr Shamik Das, Chief Executive Officer, S Tel, said, “With the successful financial closure, we are set to launch our services in six growth circles over the current year and early next year. In line with our vision, we will be deploying the best telecom expertise with advanced technology and equipment.” We will bring better choice to the consumers, tailored to meet their needs.”

Mr Sanjeev Bafna, CFO, Siva Group, said, “Although based on the merits of the project S Tel received subscription from the consortium to the tune of Rs 1,500 crore, it will be borrowing only Rs 953 crore in line with the appraised limits and in a phased manner to meet the project requirements. The funds will be used over a period of two to three years.”

“We are delighted to have closed the funding in less than six months of initiating the process. This will make S Tel the fastest among the new telecom operators to roll out services post acquisition of licenses. The company plans to start operations shortly in Himachal Pradesh, Orissa, Bihar, Jharkhand, Jammu & Kashmir, the North-East and Assam,” said Mr Arun Mandhana, Chief Financial Officer, S Tel Pvt Ltd.

S Tel is a greenfield operator targeting category C circles. These mobile markets are witnessing a high CAGR of 102 per cent as opposed to 42 per cent clocked by metros (as per inferences from TRAI Release on QE June2009). Overall, C circle markets have so far seen below 26.5 per cent mobile penetration and contribute only 12 per cent of all India’s subscriber base.