Reliance Jio Raises Biggest Offshore Loans In FY24 Worth $2 Billion: Report

Telecom giant Reliance Jio has raised close to $2 billion (Rs 16,640 crore), which is termed to be the country’s biggest offshore loans in FY24, sources were quoted as saying by The Economic Times.

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The sources further revealed that HSBC was lead arranger of the initiative that will help fund recent 5G network gear purchases from Finland's Nokia.

As per ET report,  Finnish export credit agency, Finnvera, has extended a similar insurance cover to safeguard Nokia, the supplier of Jio's 5G equipment, and the global lenders associated with the telecommunications company. 

Finnvera insurance is expected to result in a reduction in Jio's overall funding costs for its 5G equipment, as global lenders and major 5G network suppliers involved in significant deals often find greater reassurance in such arrangements.

"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," people aware of the matter were quoted as saying.

Jio has recently secured a substantial offshore loan of nearly $2 billion, with BNP Paribas as the lead arranger. This financing was utilized to facilitate the acquisition of 5G network equipment from Ericsson, a leading Swedish technology company. Notably, the Swedish export credit agency, EKN, had also extended a substantial $2.2 billion coverage for the Jio-Ericsson 5G transaction.

Since October 2022, Jio has been swiftly extending its 5G network footprint, with a goal of achieving nationwide coverage across India by December 2023. As of now, they have successfully introduced 5G services in 7,764 cities and towns, serving a customer base exceeding 62 million. In a recent development, Jio introduced Jio AirFiber, a 5G-based fixed wireless access (FWA) service, further enhancing their network capabilities. This service also relies on network infrastructure provided by industry leaders Nokia and Ericsson.

It was earlier reported that Jio had been in discussions with numerous leading international banks to secure an offshore loan of approximately $4 billion. The purpose of this funding was to support its extensive nationwide 5G rollout, primarily focused on the acquisition of network equipment from Nokia and Ericsson.

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“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 note.