India’s leading telecom provider, Reliance Jio has recently obtained loans amounting to $2 billion from BNP Paribas. The purpose of these funds is to finance the procurement of 5G network equipment from Ericsson. To mitigate risks, for lenders and suppliers involved in this deal the Swedish export credit agency EKN has provided coverage of $2.2 billion.
Reliance Jio Infocomm, India’s largest telecommunications company, is in the process of securing up to $2 billion (₹16,550 crore) in offshore loans. BNP Paribas is leading this initiative, which aims to support the acquisition of 5G network equipment from the Swedish company Ericsson.
According to an insider, BNP Paribas will extend a sum between $1.9 billion to $2 billion over a nine-month timeframe. During this period, Jio will be repaying both Ericsson and BNP Paribas, along with some other banks involved in the transaction. The funding mechanism employs a discounted approach.
The interest rate applicable to this funding will be determined over the nine-month repayment period. Swedish export credit agency EKN recently provided a $2.2-billion insurance coverage to Reliance Jio, safeguarding its 5G equipment supplier, Ericsson, and its primary lenders, primarily BNP Paribas and a select group of other banks.
This coverage is expected to reduce Jio’s overall funding costs for its 5G equipment, providing a greater degree of comfort to global lenders and equipment suppliers in light of the substantial scale of this deal.
In July, media reports indicated that Jio was in discussions with several prominent global banks to raise funds for its 5G rollout, primarily focused on acquiring equipment from Nokia in Finland (a $1.7 billion contract) and Ericsson in Sweden (a contract exceeding $2 billion).
Jio has announced a total 5G investment of $25 billion, with $11 billion already allocated to acquiring 5G airwaves in the previous year. The company is on track to achieve nationwide 5G coverage by December 2023 and has already amassed 50 million 5G users. Jio has introduced 5G services in approximately 6,260 cities and towns.
As the exclusive holder of 5G airwaves in the highly sought-after 700 MHz band, Jio has chosen a standalone approach for its nationwide 5G network rollout. It predominantly collaborates with European network vendors Ericsson and Nokia for its 5G deployments.
