Ballarat Community Telco chairman Peter Davies signed a franchise agreement this week to obtain telco services through Community Developments Australia after securing $400,000 from Ballarat businesses.

Members of the public will be invited to invest in the share holder-owned company when BCT releases its prospectus late next month.

The minimum investment is $1500, while the maximum is $80,000.

The locally owned telecommunications company, similar to a community bank, will give Ballarat people access to new technologies and improved telecommunications services.

Mr Davies said the company would give also Ballarat residents competitive telecommunications rates.

"We are committed to Ballarat having a significant say in local telecommunications services," he said.

Mr Davies said the company would also ensure local money was invested back into Ballarat.

Board member Craig Whitfield said 60 per cent of the company's profit would be reinvested in the community.

"We've pinpointed arts, youth, health education and sport to probably share equally in the profits for the first couple of years," Mr Whitfield said.

He said the response by Ballarat businesses had been very positive.

He said a 47 per cent investor return within five years was anticipated.

The BCT board of management hopes to raise $800,000 and Ballarat businesses have already committed $400,000.

Board member Allister Morrison, of Ballarat Real Estate, said the whole community would benefit.

"Giving our competitors a shake-up will benefit all customers in Ballarat," Mr Morrison said.

The company is based on the Community Telco Australia model designed to give communities greater control over their future.

It draws on the buying power of the community as a whole to negotiate a better deal for services, and to ensure the community has a greater say in the delivery of future telecommunication services.