S Tel to invest Rs700 crore for launching 3G services in three circles

S Tel Private Limited (S Tel), a joint venture between Siva Group (formerly Sterling Infotech Group) and Bahrain Telecommunications Company (Batelco), plan to invest Rs700 crore towards 3G spectrum acquisition and roll out of services.

S Tel, launched in December 2009 and claiming to have 1.2 million subscribers across the three circles of Orissa, Himachal Pradesh and Bihar and Jharkhand, said yesterday that it will spend Rs388 crore towards government license fee for radio spectrum in the three states, while the remaining will be spent on network deployment.

Headquartered in NCR region of Delhi, the company plans to raise Rs338 crore through a 1:1 debt to equity ratio to fund the license fee payment it won for the three circles of Bihar & Jharkhand, Orissa and Himachal Pradesh.

"We shall raise the funds in 1-1 debt-equity ratio. Of the Rs700 crore investment, Rs350 crore has been raised as debt from IDBI and the remaining would come as equity by Siva Group and Batelco," Shamil Das, CEO, S Tel said.

In a press release, the company said that in order to meet its debt obligations, it has tied up with Indian nationalised banks via a bridge loan and the company is set to meet the timelines stipulated by the Department of Telecom.

S Tel already has 2G licenses to operate in the C circles of Orissa, Bihar, Himachal Pradesh, North East, Assam and Jammu and Kashmir.