Reliance Jio, India's leading telecom provider, has secured a $2 billion loan, one of the country's largest offshore loans in FY24. The financing was arranged by HSBC to fund the purchase of 5G network equipment from Nokia (NYSE:NOK), a Finnish telecommunications company. The Finnish export credit agency, Finnvera, is believed to have provided insurance coverage for the deal, thus reducing Jio's overall funding costs.
The loan was finalized after several months of discussions with HSBC as the 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," said an individual with direct knowledge of the matter.
Jio had recently secured another near-$2 billion offshore loan lead-arranged by BNP Paribas (OTC:BNPQY) to fund 5G network gear purchases from Sweden's Ericsson (BS:ERICAs). The Swedish export credit agency, EKN, had provided a $2.2-billion cover for the Jio-Ericsson 5G deal.
Since October 2022, Jio has been rapidly expanding its 5G coverage and is targeting an all-India rollout by December 2023. It has already rolled out 5G services in 7,764 cities and towns and boasts over 62 million 5G customers. Last month, the company launched its 5G-based fixed wireless access (FWA) service, Jio AirFiber, which also uses network infrastructure supplied by Nokia and Ericsson.
The secured loans are part of Jio's ongoing efforts to raise funds for its nationwide 5G rollout. As previously reported, Jio was in talks with several top global banks to raise around $4 billion of offshore loan to fund its nationwide 5G rollout, mainly buying network gear from Nokia and Ericsson.
As the sole holder of 5G airwaves in the coveted 700 MHz band, Jio has opted for the standalone mode for its 5G network rollout. It is primarily working with European gear makers, Ericsson and Nokia, for its 5G deployments.
Analysts from Jefferies noted that Jio's 5G monetisation efforts could pick up speed and the telco could unlock a $7-10 billion revenue opportunity if its 5G-based Jio AirFiber service drives broadband adoption among the 85 million-odd Pay-TV homes that still don't have internet access. "Jio is well positioned to scale its FWA offering (read: Jio AirFiber) to 35 million homes by March 2026, given its hefty network investments, SA 5G setup which enables it to offer dedicated speeds, and investments in unlicensed band radio," Jefferies said in a recent note.
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