ERICSSON SIGNS $400M NETWORK MAINTENANCE PACT WITH BHARTI

Bharti has announced a $400m contract to Swedish telecom major Ericsson to manage, maintain and provide quality assurance in its 10 existing and three new circles, as a part of which Ericsson will take over 250 Bharti employees.

As part of the three-year agreement, Ericsson would deliver equipment and servers based on Bharti's capacity requirement and the payments to be made by Bharti to Ericsson would be linked to actual capacity utilisation.

Bharti is also looking at raising up to $500m through the automatic route through external commercial borrowings. "We are planning to raise between $500-600m through ECBs in the coming financial year. The funds would be used for meeting capital expenditure, the expansion of network and the refinancing of earlier debts," says Akhil Gupta, joint managing director, Bharti Televentures.

The telecom major also plans to convert its letters of intent for six circles to acquire a unified telecom license in the next few days. "We have almost completed the process, we should be signing a licence agreement with the DoT any day," confirms Mr Gupta.

With this three-year contract, Ericsson will build and manage Bharti's mobile networks in Delhi, Haryana, Punjab, Himachal Pradesh, UP (west), Andhra Pradesh, Tamil Nadu, Chennai, Karnataka and Kerala and the three new circles of Rajasthan, UP (east) and Jammu & Kashmir.
"Bharti is the first telecom service provider to consider and implement a service model, which is fast becoming a reality in most developed economies of the world," says Jan Campbell, managing director, Ericsson India.

The company will raise up to $300m offered by ABN Amro Bank, for which Swedish export credit agency EKN has provided security. The overall cost of funding, including the hedge cost, is about 4% per annum.

The agreement also provides for the take-over of 250 Bharti employees by Ericsson and payments to be made by Bharti to Ericsson would be linked with actual capacity utilisation.