Reliance’s Jio Infocomm raises $2 bn offshore loan for 5G gear purchases: Report 

Jio Infocomm, the telecom unit of Mukesh Ambani-led Reliance Industries, has raised around $2 billion or Rs 16,640 crore in one of the country’s biggest offshore loans in FY24. HSBC was the lead arranger of the transaction that will help fund the telco’s 5G gear purchases from Nokia. Finnish credit export agency Finnvera reportedly provided a cover of a similar sum to insure Jio’s 5G gear supplier Nokia and the telecom company’s global lenders from future risks.

This amount is also expected to reduce Jio’s overall 5G gear funding costs and it will make the lender and supplier more comfortable, The Economic Times reported citing people aware of the matter. “The deal was concluded recently after talks over the past couple of months with HSBC as lead arranger… the loan quantum is around $1.5-2 billion, and it is structured in a way that carries with it an implied rate of interest arrived over the tenure of the loan,” The Economic Times quoted one of the people aware of the matter as saying.

The development comes almost a month after Jio raised around $2 billion in offshore loans, with financial services company and lender BNP Paribas being the lead arranger of the transaction. This offshore loan would help fund the purchase of 5G network gear from Swedish networking and telecom company Ericsson.

BNP Paribas would provide $1.9-2 billion over a nine-month period during the course of which Jio will pay back Ericsson, BNP and some other banks. The funding is through a discounted process and implicit interest rate will be arrived at over a period of nine months during which Jio will pay back in tranches. Moreover, Swedish export credit agency EKN also provided a $2.2 billion cover to Jio that would cover its 5G supplier Ericsson and global lenders from future risks. It will also reduce Jio’s overall 5G gear funding costs since the lender and supplier would be more comfortable.

Jio’s big 5G plans

During Reliance Industries’ annual general meeting in August this year, chairman Mukesh Ambani said that Jio will be able to fulfill every 5G demand across the country by December-end. “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.

Ambani further noted that Jio has covered 96 per cent of census towns in merely 9 months while adding that 85 per cent of India’s operational 5G cells are under Jio network.

Reliance Jio Q1 results

RIL’s telecom arm reported a 12 per cent rise in its net profit to Rs 4,863 crore in Q1 2023 compared to Rs 4,335 in the corresponding period last year. The telco’s revenue from operations rose 9.9 per cent to Rs 24,042 crore in April-June quarter whereas the total income of Reliance Jio stood at Rs 24,127 crore in the same period. The company reported a 3 per cent rise in its revenue, EBITDA and net profit on a sequential basis during this period. Jio said that its average revenue per user (ARPU) rose slightly to Rs 180.5 in Q1FY24 from Rs 178.8 in Q4FY23.

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

Also Read: Reliance Jio Q1 results: Net profit rises 12% to Rs 4,863 cr; ARPU rises marginally to Rs 180.5