The House of Tatas has approached the Railways for picking up an equity stake in its telecom venture, Railtel Corporation. According to official sources, the Tata Group has made inquiries with the Railways. However, a formal proposal from the Tatas in this regard has not yet come since the Cabinet approval for private partnership in Railtel is still pending. The move assumes significance as Tata Teleservices, a Tata Group company, has been vying to become a major player in basic telephony.

They, along with Reliance and Himachal Futuristic (HFCL), have recently been issued letters of intent (LoI) for basic service licenses. Sources said that since the Tatas have been issued LoI for 15 states, which include higher- to medium-potential states, the company will need right of way for laying optic fibre cables (OFC). Tying up with Railtel will give the Tatas the advantage of having a nation-wide reach.

The Tatas are required to pay Rs 430 crore as licence fee for 15 states namely Orissa, West Bengal, Uttar Pradesh (East), Uttar Pradesh (West), Delhi, Tamil Nadu, Gujarat, Karnataka, Maharashtra, Punjab, Haryana, Kerala, Rajasthan and Bihar. The company is already operating in Andhra Pradesh.Though Reliance has already made huge investment in OFC, the Tatas are yet to firm up plans for the same. The Union Cabinet had last year approved the formation of Railtel with an authorised capital of Rs 1,000-crore. At that stage, the Cabinet had not approved private sector participation. So a fresh proposal was sent, which was referred to a group of ministers early last month. The group of ministers was also asked to decide whether the Railways or the private partner would hold a majority stake in the new company. However, the group has not met even once since it was formed prior to Ms Mamata Banerjee resigning as the railway minister.

Once the group of ministers, comprising finance minister Yashwant Sinha, disinvestment minister Arun Shourie, information technology minister Pramod Mahajan and Planning Commission deputy chairman KC Pant, besides the railway minister, decides on Railtel's future, the Cabinet would be required to give its stamp to the decision.