India Min: Nortel To Start Indian Telecom Equipment Plant

NEW DELHI -(Dow Jones)- Canada's Nortel Networks Corp. (NT), is to set up a manufacturing base in India for making telecommunication equipment, Indian Communications Minister Dayanidhi Maran said Friday.

"Nortel will set up manufacturing facilities for base stations," Maran told reporters. "They (telecom equipment manufacturers) have realized the potential of the country."

Maran didn't give a time frame for the plant to be set up or its likely location in India.

Maran said a formal notification allowing 74% foreign investment in the country's telecom companies is expected by the end of this month.

"I am positive the notification will be allowed by the end of May. While the Cabinet has approved the proposal, we are just fine-tuning the nuances of the notification," said Maran.

He said a report by investment consultant I-Sec on evolving better synergy between the two state-run telecom behemoths, Mahanagar Telephone Nigam Ltd (500108.BY) and Bharat Sanchar Nigam Ltd (BSNL.YY), is expected over the next four to eight weeks.

While MTNL offers fixed line and mobile services in New Delhi and Mumbai, BSNL offers these services across the rest of the country.

"Once I get the report, the department of telecommunications will apply their mind to the recommendations," said Maran, adding, "Within a year, I think we can evolve better synergy between these two companies."

He said India is increasingly attracting investment from international telecom manufacturing companies, such as Nortel, Alcatel SA, LG Group , Ericsson and Nokia Corp.

"By the end of this financial year, we expect up to $800 million of investment in India's telecom manufacturing facilities," said Maran.

India's financial year runs from April to March.

He added that the state-run companies, MTNL and BSNL, are expected to place orders for 80 million cellular lines based on the Global System for Mobile communications, or GSM, technology, over next several months.

Maran said he hoped India will have a total of 250 million telephone connections by 2007.

"India currently has one phone per 10 people. We want to improve that to one phone per five persons," said Maran.

-By Prasenjit Bhattacharya, Dow Jones Newswires; 91-11-2307-4020; Prasenjit.Bhattacharya@dowjones.com

-Edited by Marissa Chew

(END) Dow Jones Newswires"

Posted to the site on 20th May 2005