Announcement of India to Launch Two Billion Fifty Million US Dollars Telecommunications Project in Four Cities on May 18, 1987

FOR IMMEDIATE RELEASE ,World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. BANK NEWS RELEASE NO. 87/67 Contact: Pastor Sison (202) 477-3653 INDIA TO LAUNCH $2.05 BILLION TELECOMMUNICATIONS PROJECT IN FOUR CITIES WASHINGTON, May 18 -- To meet the increasing demand for better telecommunications services, India will expand and upgrade telephone and telex networks in four major cities and the long distance links between them. The World Bank has approved a loan of $345 million in support of the $2.05 billion project to be carried out in the cities of Bombay, Delhi, Madras and Calcutta, which contain about 34 percent of the country's direct exchange telephone lines. The project represents some 40 percent of the five-year investment program of the Department of Telecommunications (DOT) and the Mahanagar Telephone Nigam Limited (MTNL), a public corporation that operates the Bombay and Delhi networks. Improved telecommunications are vital to India's new market-oriented liberalization policies, as the efficient functioning of markets depends on the flow of reliable information. The project will help finance the installation of new digital transmission and switching facilities to increase the telephone exchange capacity in the four cities. Ground station networks for domestic satellites will be modernized and expanded. A management system for long-distance networks will be established to locate, bypass or eliminate communications bottlenecks. A network adapted to the transmission of computer data will be set up among the four cities as well as other major cities and industrial areas. Automated facilities will be installed for detailed billing of long-distance calls. With support from the United Nations Development Programme (UNDP), the project will provide a program to upgrade five DOT regional training centers. Consultants to assist in institutional improvements in DOT and in the design of the data transmission network will be provided. The project is expected to relieve telecommunications congestion in the key cities and assist in their development. It is also expected to generate substantial profits, which may be used to cross-subsidize other important parts of the network. In addition to the Bank loan, other financing will be provided by the government, DOT and MTNL ($1.64 billion), Overseas Export Credit Fund of Japan ($60 million), and UNDP ($2.5 million). The World Bank loan is for 20 years, including five years of grace, at the standard variable interest rate, currently 7.92 percent, linked to the cost of the Bank's borrowings. It also carries an annual commitment charge of 0.75 percent on the undisbursed balances. Note: Money figures are in U.S. dollar equivalents.