Reliance Jio in talks with global lenders to raise $1.5 billion

Reliance Jio Infocomm is planning to raise an additional $1.5 billion (Rs 12,300 crore) via external commercial borrowings (ECBs) to fund its 5G capex, three persons familiar with the matter told ET. It has reached out to foreign banks including BNP Paribas, HSBC and MUFG Bank, they said, adding that India’s telecom market leader is seeking to mop up five-year money via the ECB route, with Reserve Bank of India having relaxed norms a few months ago.

The latest fundraising is in addition to a $2.5-billion (Rs 20,600 crore) offshore syndicated loan for which the telecom arm of Mukesh Ambani-owned Reliance Industries (RIL) is in talks with overseas lenders, as ET reported on October 10. This will be used for 5G network gear purchases from Sweden’s Ericsson and Finland’s Nokia.

Sources said the $1.5-billion offshore loan may be priced after adding 150-165 basis points over the Secured Overnight Financing Rate (SOFR), a global rate gauge that recently replaced the London Interbank Offered Rate (LIBOR). “The company has called individual banks proposing the fund-raising, as it is aiming to raise the money by mid-November,” said one of the persons cited above.

Bank of America, Credit Agricole, DBS Bank and Société Générale are among others in talks with the company on the ECB, another person said.

In July, RBI doubled the fundraising limit via ECBs to $1.5 billion under the automatic route on expectations that foreign fund inflows could cushion the rupee’s slide against the dollar. The relaxation in the regulations is effective till the end of calendar 2022.

Talks over both the loans are going on “simultaneously,” said an executive involved in the exercise.

The $2.5-billion loan may be of a five-year tenor and is expected to be priced after adding 130-150 basis points over SOFR, one of the people said.

Jio and the banks named above did not comment on the matter.

The acceleration in Jio’s 5G network capex spends comes amid pressure from the government to speed up adoption of the next-gen wireless broadband service in India. The telco is investing Rs 2 lakh crore (including spectrum costs) to set up its pan-India 5G network. In the auction concluded in August, it spent Rs 88,078 crore on 5G air-waves.

Earlier this month, Jio started its 5G beta services in four cities, with plans to provide countrywide coverage by December 2023.

Separately, parent RIL is also engaged with foreign lenders to raise funds via ECBs to support its capex plan, which ET also reported on October 10. It is in talks with lenders, including Barclays, MUFG Bank, Citigroup and Mizuho Bank, among others.

Shares of RIL closed at Rs 2,371, down 0.54%, on the BSE on Friday.