Bharti Telenet was the first basic-service provider to be off the mark when it launched its commercial services in Indore a couple of months ago. The company has also secured a $150-million (about Rs 630 crore) vendor credit from three equipment suppliers -- $50 million each from Motorola, Alcatel and Siemens.

According to company officials, loans worth Rs 325 crore have already been sanctioned by the Industrial Development Bank of India (IDBI) and the Infrastructure Development Finance Corporation (IDFC). While IDBI has sanctioned Rs 250 crore, IDFC, in its first-ever funding for a telecom project, has approved Rs 75 crore.

The State Bank of India has given an in-principle clearance for a Rs 125-crore loan and the final clearance is expected soon. Besides, the Industrial Credit and Investment Corporation of India is close to finalising a Rs 100-125 crore loan to the project, with the Infrastructure Leasing & Financial Services expected to chip in an estimated Rs 60-75 crore.

Bharti Telenet is expected to either take a term-loan or secure a guarantee from these institutions to float debentures. The final modalities are expected to be worked out shortly. Company officials,however, said that the cost of funds will in either case work out to between 13.5 per cent and 14 per cent and repayment will be over six years, after an initial moratorium of four years.

It is understood that even in the case of vendor financing, the repayment will start only after a four-year moratorium by when the company expects to turn cash-flow positive.

Bharti Telenet expects to invest about Rs 4,000 crore into the venture over 15 years. Of this, an estimated Rs 1,100 crore is planned to be invested within the first four years.

The company has projected its peak equity requirement to be about Rs 437 crore, which it expects to touch by the fourth year. Of this, Bharti has already brought in Rs 140 crore and the first phase of setting up its network has been financed entirely through this amount.

Bharti Telenet is a joint venture between Bharti Televentures, Telecom Italia and Bharti Telecom and has committed to pay a licence fee of Rs 654 crore over 15 years. While Bharti Televentures holds a 51 per cent stake in the company, Telecom Italia holds a 30 per cent stake with Bharti Telecom holding the balance. Bharti Televentures is a 80:20 joint venture between Bharti Telecom and Stet of Italy.