Reliance Jio, India’s largest telecom operator, is on the verge of finalising a significant contract worth around $1.7 billion (Rs 14,000 crore) with Nokia, a leading telecommunications company based in Finland. According to ET’s sources familiar with the matter, the agreement is expected to be signed later this week at Nokia’s headquarters near Helsinki, where senior executives from Reliance Industries’ telecom unit and the banks involved in financing the purchase will be present.
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This deal with Nokia comes in addition to Reliance Jio’s previous announcement of a $2.1 billion equipment purchase from Ericsson, a Swedish multinational networking and telecommunications company. The telecom giant is actively preparing to introduce 5G mobile broadband services across India by the end of this year, and these equipment acquisitions are crucial steps in that direction.
To finance these massive 5G equipment deals with Nokia and Ericsson, Reliance Jio has secured support from several global banks, including HSBC, JP Morgan, and Citigroup. The telecom operator is raising funds through syndicated offshore loans, totalling nearly $4 billion, according to Economic Times. As reported earlier, Jio has been in talks with these foreign banks to secure financing for the Ericsson 5G contract.
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Reliance Jio holds exclusive 5G airwaves in the highly efficient 700 MHz band, and as a result, the company has opted for a standalone mode for its nationwide 5G rollout. This means that Jio’s network will not depend on the existing 4G infrastructure, and it will be implemented independently. The company has primarily partnered with European vendors such as Ericsson and Nokia for the deployment of its 5G network.
To facilitate the offshore loans extended to Jio, Finnvera, a European export credit agency, will issue guarantees to the global lenders. These guarantees aim to increase the lenders’ confidence and reduce overall funding costs, as per ET report.
Since October of last year, Jio has been rapidly expanding its 5G coverage and aims to achieve a nationwide rollout by the end of 2023. The company has already introduced 5G services in over 6,000 cities and towns across India.
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In total, Jio plans to invest $25 billion in 5G, with $11 billion already spent on acquiring 5G spectrum last year. The remaining $14 billion will be allocated over the next four years for network assets and customer premise equipment.
Industry experts note that Jio’s immediate capital expenditure (capex) for 5G will be higher than that of Bharti Airtel, another major Indian telecom operator. This is because Jio needs to invest in a greater number of base stations that support multiple 5G bands, including both the 3.5 GHz and 700 MHz spectrums.
In contrast, Airtel has opted for the non-standalone mode for its 5G rollout. This mode utilises existing 4G mid-band airwaves (1800 MHz, 2100 MHz, 2300 MHz), which Airtel already possesses in sufficient quantities, along with C-band capacity 5G spectrum (3.5 GHz) to offer faster speeds.
