In order to finance between $1.5 billion (8,200–12,330 crore) through an offshore syndicated loan, Reliance Jio Infocomm is in advanced negotiations with a number of bulge-bracket international banks. In order to carry out next-generation mobile broadband services throughout the nation by December 2023, India’s largest telecom operator will utilize the cash to purchase 5G network equipment from Sweden’s Ericsson.
According to two people with knowledge of the situation, banks including HSBC, JP Morgan Chase, and Citi would likely charge Jio a higher interest rate than the Secured Overnight Financing Rate (SOFR), a new worldwide rate benchmark. They said that the loans’ price might be between 100 and 150 basis points higher than the SOFR.
As it gets ready to purchase Ericsson’s 5G radio network equipment, discussions are ongoing, and Jio is anticipated to soon confirm the hiring of bankers.
Separately, European export credit agency Finnvera is probably going to give bankers guarantees so they can give Jio an offshore loan. By lowering total finance costs, such assurances are anticipated to increase the comfort levels of international lenders.
Until Friday afternoon, Jio, Ericsson, and Citi had not responded to ET’s emails. HSBC, JP Morgan Chase, and Helsinki-based Finnvera all declined to comment.
“Export credit agencies (ECAs) are very interested in well-rated companies like Reliance because there are advantages on both sides in the western bloc and in places like Korea. The most recent syndicated loan, which follows a similar round for buying Nokia equipment, will be for at least $1 billion,” according to a banker.
Headed by Mukesh Ambani Since last October, Jio has been aggressively increasing its 5G coverage, and by the end of the year, it hopes to have covered the whole country. In almost 5,700 cities and municipalities, 5G services have already been launched.
Jio has stated that it will invest a total of $25 billion in 5G, of which $11 billion will be used to buy 5G spectrum.
Brokerage Sanford C. Bernstein anticipates using the remaining $14 billion in capital expenditures for client (premises) equipment and network assets.
Jio, the exclusive owner of 5G airwaves in the highly sought-after 700 MHz band, chose the standalone mode for the launch of its 5G network across the whole nation. For 5G installations, it primarily collaborates with European network providers Ericsson and Nokia. According to experts in the field, Jio has greater urgent 5G capital demands than Airtel.
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