Lucent set to bag $200 million Reliance Telcom order for Gujarat Circle

Reliance Telecom is the basic telecom services provider in Gujarat.

Sources say Lucent, the US telecom vendor, is in advanced stages of negotiations with Reliance.

Top Reliance executives visited Lucent Technologies facilities in the US last month as part of the discussions, they added.

A Reliance spokesperson has been quoted as saying that "It is the company policy not to comment on specific contracts." One of the options the petrochemicals-to-textiles major is examining is the structuring of the equipment deal on a build-own-transfer basis that will help minimise the risk to the promoter.

Under terms of the deal, the telecom vendor will supply equipment and set up the network for Reliance. It will then take the asset on to its balance sheet instead of the conventional approach of it being carried by the telecom services company on its accounts.

Subsequently, after a fixed period, the network will be transferred to the promoter company.

The advantage of structuring the deal in this manner is that the project risk is minimised for Reliance.

Reliance Telecom is expected to start operations in the first quarter of 1999.

The license fee for a 15-year period is Rs 33.95 billion, while the estimated cost in the first five years of operations, including the quantum license fee paid, is $1 billion or Rs 43 billion.

The company has paid the government Rs 970 million as the first year license fee. It is currently recruiting employees for the Gujarat project.

Besides Vijay Gupta, who heads the Gujarat project, Reliance has hired B K Syngal, former chairman and managing director of Videsh Sanchar Nigam Limited as the chairman of Reliance Telecom. Ashwini Windlass, former CEO of Mumbai cellular operator Hutchison Max has been appointed vice-chairman and managing director.

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