According to Microwave Communications chairman and managing director Deepak Malhotra, HFCL is planning to bring in quality private investors into the venture.

"We are looking at fresh fund raising which will expand our present equity base of Rs 32 crore," he said.

While HFCL is yet to decide on the level of divestment, Malhotra said it will depend mainly on the ongoing valuation of Microwave Communications' business. "Many people are adopting the holding company structure for divestment and we are also seriously looking at it," he said.

While the amount of fresh equity to be pumped into the venture is yet to be decided, Malhotra said this will also depend on the new investor.

This will be the second telecom venture in which HFCL would be divesting its stake.The company had earlier reduced its holding in the cellular venture, Fascel Ltd, which it promoted along with Shinawatra and Bezeq International of Israel, from 51 per cent to the minimum permissible 10 per cent. While it had sold 30 per cent to the Hinduja's telecom investment arm, IndusInd Telecom Network Ltd, it sold a further 11 per cent to Kotak Mahindra.

HFCL is also reportedly considering reducing its stake in its basic services venture, in which it has a 51 per cent stake with Bezeq holding 33 per cent and Shinawatra 16 per cent. The company's basic-services project has been entangled in a legal mess for the past couple of years. It is understood that the company is now keen on an out-of-court settlement with the department of telecommunications (DoT) to sign the basic-services licence for Haryana.

Microwave Communications, which markets its services under the Pagelink brand name, provides paging services in Delhi, Mumbai, Calcutta, Ahmedabad, Vadodra, Surat and Rajkot. The company, having a 1.5lakh subscriber base, also offers value-added services such as bilingual paging in Hindi, Gujarati and Marathi.