India's operators are on a fund-raising spree as they battle one another for customer gains in the country's fast-growing smartphone market.

Reliance Jio, the country's aggressive new entrant, was recently in the news for its efforts to acquire additional funding of 8.9 billion Indian rupees ($131 million). Last month, the telecom unit of Reliance Industries, India's largest conglomerate, raised $498.5 million through a loan from Japanese banks.

"The facility is guaranteed by Reliance Industries Limited and will be used for funding Reliance Jio's ongoing capital expenditure," said RJio in a statement about the so-called "Samurai" loan. This is the largest-ever Samurai loan (which means a low-interest loan from Japanese investors) for an Asian corporate.

Also last month, the RJio board approved plans to raise around INR200 billion ($3 billion) in debt. The company has now invested around INR2 trillion ($29.5 billion) in setting up the business. Included in recent expenditure is the purchase of mobile assets from Reliance Communications for around INR250 billion ($3.7 billion).

RJio has been able to acquire more than 200 million subscribers since September 2016, when it launched commercial 4G services in India. It announced net profit of INR5.1 billion ($75.2 million) in the quarter ending in March this year.

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But it is not the only player raising funds. Bharti Airtel Ltd. (Mumbai: BHARTIARTL) is now planning to reduce its ownership stake in its African business by one quarter so that it can raise $1.5 billion for investment activities. A listing on the London Stock Exchange is likely to happen in early 2019. Airtel, currently India's largest service provider, is also likely to sell its stake in a towers business formed from the merger of its Bharti Infratel business with Indus Towers, a joint venture Airtel operates with Vodafone India and Idea Cellular Ltd. (See Bharti Infratel, Indus Towers Merge to Form $14.6B Giant.)

Airtel has faced tough competition from RJio and needs funds to stay competitive in the Indian market. For the first three months of 2018, it reported its first quarterly loss in 15 years. Net debts have ballooned to INR950 billion ($14 billion). (See Fierce Competition Batters Airtel Profits Again.)

That said, Airtel's African operations have recently started to post profits. Predictably enough, the company says it will rely on African growth to sustain its leadership position in India. Losing its position to RJio would be a blow to Airtel's prestige.

But competition is only going to intensify in the coming months. RJio, which recently launched its first postpaid plans, is likely to begin attacking its rivals on another front with the launch of products and services for the home and enterprise segments. That would clearly add to the current pressure on Airtel.

The Indian telcos are essentially raising capital for an ongoing tariff war. But operators are already gasping under a huge pile of debt, and the fund-raising activity threatens to make the situation worse. Experts reckon a tariff war may persist for the rest of this year, and might even continue into early 2019. (See Indian Telcos to Ramp Up Network Investment in Next 2 Years.)

— Gagandeep Kaur, contributing editor, special to Light Reading