Reliance Jio Infocomm, India's leading telecommunication operator, is reportedly raising up to $2 billion in offshore loans through BNP Paribas (OTC:BNPQY) to fund the purchase of 5G network equipment from Ericsson (BS:ERICAs). The report was initially published by a local newspaper, The Economic Times, citing sources familiar with the matter.
BNP Paribas, a French multinational bank, is set to provide between $1.9 and $2 billion over a nine-month period, during which Jio will be repaying Ericsson, BNP, and other banks involved. This funding initiative is further supported by the Swedish export credit agency EKN, which recently provided a $2.2 billion cover to Reliance Jio Infocomm. This cover is expected to mitigate potential risks for Ericsson and the international banks involved.
Jio has announced plans to invest approximately $25 billion in 5G technology, with $11 billion already spent on spectrum acquisition last year. The operator aims to achieve nationwide 5G coverage by December and become the world's largest 5G SA-only network operator by the second half of 2023.
The telecom giant has been rapidly expanding its 5G network using Standalone (SA) architecture since October 2022 and has already deployed its service in over 6,258 cities across all 36 states in India. Currently, Jio's 5G offering is present in over 96% of census towns across India.
In addition to this, Reliance Jio Infocomm has confirmed that it will launch its fixed wireless access (FWA) offering on September 19. The devices required for this service have already been sent for testing in cities where its 5G services are fully operational.
However, the company's ambitious plans come amid concerns about the monetization of 5G services, which are still a year away. There are uncertainties regarding the availability of devices and revenue-earning use cases. Furthermore, there is a risk of rupee depreciation against the US dollar that could impact these plans.
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