Reliance Jio Raises An Offshore Loan Of Around $2 Billion (Image: x.com/@reliancejio)
Reliance Jio Infocomm has raised an offshore loan of around Rs. $2 billion, that is Rs.16, 640 crore for the purchase of 5G gear. The loan’s lead arranger was HSBC and this would help in Jio’s 5G purchase from Finnish Nokia. This is the country’s biggest offshore loan for the financial year 2024 reported the ET.
During the AGM in August, the Reliance Industries Chairman, Mukesh Ambani had said that Jio would be fulfilling every 5G demand in the country by the end of December. The telecom company, Jio’s 5G gear supplier Nokia and the telecom company’s global lenders had received a similar amount from Finnvera to insure from risks in future. The loan raised, would be helpful in reducing the overall funding for the 5G gear, making both the lender and supplier comfortable, the ET reported citing sources who knew the matter.
The ET quoted an insider, saying, “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,” reported the Business Today.
Earlier, Reliance Jio had raised offshore loans of around $2 billion. BNP Paribas, the financial services company and lender was the lead arranger for this loan. This loan, is to help the purchase of the 5G gear from Ericson, which is a Swedish networking and telecom company.
The BNP Paribus, would give $1.9-2 billion, over a nine-month period, during the time, Jio would pay Ericsson back, BNP and some other banks, the ET said. Jio would return the money in segments. The funding would be through a discount, and the implicit interest rate will be reached in over the period of nine months. Other agencies have also provided loans to Jio, including the EKN, which is a Swedish export credit agency and has given $2.2 billion to cover its supplier for 5G, Ericson and global lenders from future risks. These loans are expected to bring down Jio’s total 5G gear costs, for both the supplier and lender, making the situation a comfortable one.
Jio, in its annual meeting had said that it would close in every 5G demand of the country. On Jio’s 5G plans, Reliance MD and Chair, Mukesh Ambani had said, “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 fulfil each and every demand for Jio 5G broadband connection across the country.” In the meeting, he also said that the company has covered 96 percent of towns in just nine months and that 85 percent of operational 5G comes under Jio network.
In the first quarter of 2023, Reliance Industries Limited had reported a 12 percent rise in net profit to Rs 4,863 crore as compared to last year’s Rs 4,335. In the quarter, April -June, the revenue rose to Rs 24,042, that is 9.9 percent while the total revenue was at Rs 24,127 in the same period.
