Reliance Jio raising $2 billion; BNP Paribas lead arranger of initiative: Report

Reliance Jio Infocomm is reportedly raising $2 billion or around Rs 16,550 crore in offshore loans. Financial services company and lender BNP Paribas is reportedly the lead arranger of the initiative that would help fund the purchase of 5G network gear from Stockholm-based networking and telecommunications company Ericsson.

According to a report in The Economic Times that quoted people in the know, BNP Paribas will provide $1.9-2 billion over a nine-month period during the course of which Jio will be paying back Ericsson, BNP and some other banks.

The funding is through a discounted process, the report added. The implicit interest rate will be arrived at over the period of nine months during which Jio will pay back in tranches.

Meanwhile, Swedish export credit agency EKN recently provided a $2.2 billion cover to Reliance Jio that will cover its 5G supplier Ericsson and global lenders from risks.

The report cited a source who said that the cover will reduce Jio’s overall 5G gear funding costs as the lender and supplier will be more comfortable. The EKN cover is also critical considering the size of the loan as well as the fact that monetisation of 5G services is still a year away in the absence of a device ecosystem. A rupee depreciation could also push up Jio’s foreign debt repayment burden.

During Reliance Industries’ annual general meeting last week, Chairman Mukesh Ambani said that from December Jio will be able to fulfill every 5G demand. “With this massive reach and capacity, here is our promise: We know that every home, small and medium businesses, factories, schools, and hospitals across India would like to have 5G. From December this year, we will be able to promptly fulfill each and every demand for Jio 5G broadband connection across the country,” he said.

He said the 5G rollout began last October and in just nine months, Jio 5G is already present in over 96 per cent of the census towns of the country. “And we’re on track to cover the entire country by December this year. This makes Jio 5G the fastest-ever 5G rollout of this scale anywhere in the world. Today, nearly 85% of the total 5G cells operational in India are in Jio’s network. At our current pace, we are adding one 5G cell to our network every 10 seconds, and we will have nearly 1 million 5G cells operational in our network by December,” he said.

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