Mumbai: Jio is set to raise about $500 million (Rs 3,500 crore) in fresh overseas borrowings as Indias newest phone company doubles down on optic-fibre expansion to back up its home broadband entry and prepares for upcoming spectrum sales.
A group of Asian banks is managing the process along with others, said three people with the knowledge of the matter. Jio is a unit of Reliance Industries (RIL), which is also raising money through this route. “The proposed fund-raising is in the process simultaneously with RILs syndicated loan of $1.85 billion,” one of the people told ET.
The Jio loans could have a tenor of five-and-a-half years and be priced at 130-140 basis points over the London Interbank Offered Rate (Libor), the people said. The measure is now at 2.32 per cent. A basis point is 0.01 percentage point.
“This makes sense where one can borrow from global markets at 2-3 per cent compared to the domestic market where the interest rate is 10 per cent — this makes for cost arbitrage,” said an analyst at a Mumbai-based brokerage.
Attempts to Pare Debt
RIL is raising $1.85 billion (Rs 12,840 crore) in fresh overseas loans in largest fund-raising exercise this fiscal year by an Indian corporate house. ET was the first to report on RILs plans on June 21.
A group of about three dozen banks is helping both the companies in the fund-raising. Most of the lenders are from Asia, the people said.
The investment banks involved include Bank of China, Sumitomo Mitsui Banking Corp, Development Bank of Japan, DBS, HSBC, JPMorgan, Barclays and First Abu Dhabi Bank. They could not be reached immediately for comment.
RIL didnt respond to queries.
“Vodafone Idea and Bharti Airtel have raised money and Jio too needs funds infusion for its fibre rollout plans and the upcoming 5G spectrum auction,” said a leading telecom analyst. “Even if the prices for spectrum get tempered, the war chest needs to be ready.”
Rivals Vodafone India and Bharti Airtel recently raised Rs 25,000 crore each via rights Issues. Bharti Airtel raised a further Rs 7,000 crore via a bond sale.
Jio is expected to roll out its fibre-to-the-home (FTTH) broadband service later this year and will also be the strongest contender for spectrum during the 4G and 5G auctions expected by December.
The fund-raising plan follows reports of RIL planning to infuse as much as Rs 20,000 crore into Jio to bolster its broadband and ecommerce pRead More – Source