Reliance Jio aims to raise Rs 12,000 crore by mid-November for 5G capex; in talks with global lenders

New Delhi – After announcing its plans to roll out 5G service across the country by December 2023, Reliance Jio Infocomm is looking to raise an additional $1.5 billion (Rs 12,300 crore) through external commercial borrowings (ECBs). The money will be used to fund Jio's 5G capex, according to three people familiar with the development.

The Mukesh Ambani-led telecommunications company approached foreign banks, including BNP Paribas, HSBC and MUFG Bank, for the same purpose. The country's main telecoms operator plans to raise funds for five years through the European Central Bank route, with the Reserve Bank of India easing standards a few months ago.

Ambani's Reliance Industries (RIL) is also in talks with offshore lenders for a $2.5 billion (Rs 20.6 billion rupees) offshore syndication and the latest Jio financing as well, People told the Business2Business. This will be used to purchase 5G equipment from Sweden's Ericsson and Finland's Nokia.

The $1.5 billion offshore loan may be priced after adding 150-165 basis points in the secured overnight funding rate (SOFR), a global rate measure that recently replaced the London Interbank Offered Rate (LIBOR), according to the sources. “The company has been in contact with individual banks proposing to raise funds, as they aim to raise funds in mid-November,” said one of the people mentioned above.

Bank of America, Credit Agricole, DBS and Societe Generale, among others, are in talks with the company about the European Central Bank.

It should be noted here that in July the Reserve Bank of India doubled the fundraising limit through the European Central Bank to $1.5 billion under the automatic route. This was done in the expectation that foreign money inflows could mitigate the rupee's decline against the dollar. The relaxation in the regulations is in force until the end of the 2022 calendar.

Meanwhile, the discussion of both loans (for both RIL and Jio) continues "along with" the $2.5 billion loan for an initial term of five years. It is expected to be priced after adding 130-150 basis points over SOFR, one person said.

On the other hand, Jio is investing Rs 2 crore (including spectrum costs) to build a pan-India 5G network. In the auction that ended in August, Rs 88,078 crore was spent on 5G radio waves. The operator started its 5G trial services in four cities earlier this month.

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