Mumbai: Mukesh Ambani’s owned telecommunication company, Reliance Jio Infocomm, is reported to be in talks with a clutch of global banks to raise around $1-1.5 billion through an offshore syndicated loan. The fund thus generated would be spent on buying 5G network gear from Sweden’s Ericsson for the company’s next-gen mobile broadband services rollout later this year.
Global lenders such as JPMorgan Chase, Citi and HSBC are likely arrange around 3-5 year loans for Jio, which, market experts believe, would be priced above the Secured Overnight Financing Rate (SOFR). The pricing of the loans could be around 100-150 basis points above the SOFR.
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Besides, European export credit agency Finnvera is likely to issue guarantees to the lenders for extending the offshore loan to Jio, which has been rapidly expanding its 5G coverage since last October. The telecom operator has already rolled out 5G services in around 5,700 cities/ towns in the country.
Reports say that Jio has said that it will make a cumulative 5G investment of $25 billion, of which $11 billion was spent on acquiring the 5G spectrum. Jio is the only Indian telecom operator which went for the 700 MHz spectrum in India’s 5G spectrum auction. Jio is primarily working with European network vendors Ericsson and Nokia for its 5G deployment.
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Officials of Reliance Jio said that they were looking to looking to raise around $1.6 billion from the offshore to purchase of latest equipment from Nokia. Nokia had in last October announced that it had clinched an agreement to supply Jio with equipment for its 5G rollout in India. Ambani’s Reliance Industries Ltd. was the first out of the starting blocks to offer 5G in India, after investing billions of dollars to acquire the airwaves.
Jio’s rival Bharti Airterl’s 5G network rollout is lagging in India, according to an analyst report.
Analysts at investment services provider JP Morgan in the report said the measured coverage could prompt a higher capital expenditure over the next 12-18 months by Bharti Airtel, which could face potential market share losses if the coverage gap is not closed.
5G availability in Bharti’s top circles by revenues also lagged Jio by similar levels (36% vs Bharti at 13%). In terms of 5G reach-which means the average proportion of locations where consumers are connected to a 5G network out of all locations visited – Jio is at 4.2 against Bharti Airtel’s 3.4, with the Mukesh Ambani-group company leading in 21 circles, the report said.
