India’s largest telecom operator, Jio, intends to leverage these funds to expedite the nationwide deployment of next-generation mobile broadband services by December 2023.
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Reliance Jio Infocomm is reportedly engaged in advanced discussions with several major global banks to secure a substantial offshore syndicated loan worth approximately $1-1.5 billion (Rs 8,200-12,330 crore).
The purpose of this financial endeavor is to facilitate the procurement of cutting-edge 5G network equipment from Ericsson, a prominent Swedish telecommunications company. India’s largest telecom operator, Jio, intends to leverage these funds to expedite the nationwide deployment of next-generation mobile broadband services by December 2023.
The participating banks, including HSBC, JP Morgan Chase, and Citi, among others, are poised to orchestrate a loan spanning a duration of 3-5 years. The loan’s interest rate is expected to surpass the Secured Overnight Financing Rate (SOFR), a newly introduced global benchmark, by an estimated margin of 100-150 basis points.
These discussions are swiftly progressing, with Jio on the verge of finalizing the appointment of its banking partners as it prepares to execute the procurement of Ericsson’s 5G radio network equipment, according to an insider.
Additionally, the European export credit agency Finnvera is anticipated to issue guarantees to the lenders, thereby lowering the overall funding costs. Such guarantees will enhance the confidence of foreign lenders and contribute to the reduction of financial burdens associated with extending offshore loans to Jio.
Reliance, being a well-rated entity, has attracted substantial interest from export credit agencies operating in Western countries and regions such as Korea. The forthcoming syndicated loan, following a previous round for the acquisition of Nokia‘s equipment, is projected to amount to at least $1 billion, as stated by a banking industry professional.
Under the leadership of Mukesh Ambani, Jio has been rapidly expanding its 5G coverage since October of the previous year and aims to achieve a nationwide rollout of this advanced technology by the end of this year. Already, Jio has introduced 5G services across approximately 5,700 cities and towns.
As the exclusive holder of 5G airwaves in the highly sought-after 700 MHz bands, Jio has adopted a standalone mode for the deployment of its countrywide 5G network. In this endeavor, Jio has predominantly partnered with European network vendors Ericsson and Nokia.
Jio has expressed its commitment to invest a cumulative amount of $25 billion in 5G infrastructure, with $11 billion already utilized for the acquisition of 5G spectrum. The remaining $14 billion of capital expenditure is anticipated to be allocated toward network assets and customer equipment (premises), according to the analysis provided by Sanford C. Bernstein, a reputable brokerage firm.
