CHENNAI, July 20: The fate of the second cellular licence for the Tamil Nadu circle, barring Chennai, will be decided soon. The decision will come after 18 months of vacillation.

City-based Srinivas Telecom, in which the C Sivasankaran-promoted Sterling Horticulture and Research holds a 41 per cent stake, is posied to bag the cellular licence for the state. The other licence holder for the non-metro circle is BPL-US West.

The licence fee for the project works out to Rs 836 crore. Srinivas Telecom will pay Rs 76 crore in different instalments for the first five years and Rs 83 crore over the next five years.

The company has sought a grace period of 6 months from the Department of Telecommunications (DoT) to sign the licence agreement so that it can raise funds. It is willing to deposit Rs 38 crore immediately.

The company would be liable to forfeit the sum at the end of the sixth-month period if it fails to raise the balance amount.

Srinivas Telecom, which is a joint venture between four partners, will have an equity base of Rs 180 crore. Sivasankaran's Sterling Horticulture and Research will get the majority stake.

The other partners are the Singapore-based Chenrai group's Redington Pte with a 39 per cent stake, Srinivas Computers and the US-based Century Telephone Inc holding 10 per cent each.

The funds required for the project will be sourced by way of debt and equity in equal measures.

The cellular network is expected to be in place by January 1998, although the commercial launch is scheduled only for April 1998.

Srinivas Telecom plans to set up a 2,00,000-strong subscriber system at a cost of Rs 350 crore. The company has shortlisted Ericsson, Motorola, Siemens and Lucent Technologies for supply of equipment, which will adopt the GSM (Global System for Mobile) mode.

Srinivas intends to appoint 400 exclusive dealers across the state. It is learnt that an advertisement released by the company, soliciting dealership enquiries, has elicited 950 responses till now.

Srinivas Telecom, as part of its marketing strategy, proposes to supply free handsets to all its subscribers in the initial stage. The company is also pricing its call rates aggressively. The charge for one call is likely to be Rs 1.40. Srinivas has also drawn up plans for a uniform rate structure across the state.

The company was earlier ranked third among the bidders for the Tamil Nadu circle. BPL-US West, which holds the other licence for Tamil Nadu circle, stood first with a bid of Rs 836 crore. It was followed by HHS Communications' bid of Rs 541.2 crore. Srinivas Telecom had, at that point of time, bid Rs 450 crore.

The letter of intent (LoI) given to HHS was later cancelled since the company failed to pay up the licence fee. It is learnt that HHS, which was required to match the BPL-US West bid, could not decide on the licence fee owing to differences among the consortium members on the quesion of the project's viability.

The consortium comprised Hinduja-HCL, RPG and Singapore Telecom. DoT turned to Srinivas Telecom, the third party interested in the project.

After the company expressed its willingness to match the first bid, the letter of intent has been filed in the name of Srinivas Telecom.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.