How India’s Jio and Airtel are funding 5G

Indian telcos Jio and Airtel are busy raising funds to set up pan-India 5G networks.

Gagandeep Kaur, Contributing Editor

July 6, 2023

4 Min Read
How India’s Jio and Airtel are funding 5G
Reliance Jio and Airtel have been raising funds for their 5G network rollouts.Source: Per Bengston/Alamy Stock Photo

India's largest service provider, Reliance Jio, is in talks with several banks to raise between $1 billion and $1.5 billion through an offshore syndicated loan to purchase 5G gear from European telecom gear makers Ericsson and Nokia, according to several media reports.

Both Nokia and Ericsson announced 5G deals with Jio last year. As per recent media reports, Jio will purchase equipment worth $1.7 billion from Nokia and $2.1 billion from Ericsson to further expand its 5G services.

Reliance Industries, the largest Indian business house, along with Jio, was in the news recently for raising $5 billion in foreign currency loans, believed to be the largest syndicated loan in India's corporate history. Out of this $5 billion, Jio had raised $2 billion from 18 banks, which would be used to fund its nationwide 5G network. Last year, Jio had also acquired a $750 million five-year new money club loan for capital expenses.

Jio has committed to providing 5G coverage across the country by the end of the current calendar year. It is the only Indian player which has acquired the pan-India 700MHz spectrum to be used to set up a 5G standalone (SA) network. Last year, the company had invested 880.78 billion Indian rupees ($10.68 billion) in acquiring 5G spectrum in the 700MHz, 800MHz, 1800MHz, 3300MHz and 26GHz frequency bands for 20 years. Jio Platform's wholly owned subsidiary, Radisys, also spent $60 million to acquire Mimosa Networks last year.

Jio started its fundraising journey in 2021 when it raised a massive INR1.5 trillion ($18.19 billion) by divesting a 33% stake in Jio Platforms. Several global investors and technology companies, including Qualcomm, Intel, Google, KKR, Silver Lake and General Atlantic, had invested in the company.

Jio announced last year that it plans to invest INR2 trillion ($24.26 billion) to roll out a 5G network in the country. An important part of this is spending around $11 billion on acquiring spectrum. On the other hand, Airtel has shared guidance of a total capital expenditure of INR750 billion ($9.09 billion) over the next three years. A major chunk of this expense would be on 5G networks.

Airtel is also on a fundraising spree

Bharti Airtel, India's second-largest service provider, is also in talks to raise $1 billion to refinance high-cost debt, improve its balance sheet and cover a part of its 5G capex, as per media reports. The service provider is believed to be in talks with Barclays, Standard Chartered Bank and Citibank to explore the possibility of floating US dollar bonds in the overseas market this year. Last year, Airtel was trying to raise INR30 billion ($360 million) in short-term debt locally.

The capital expenditure intensity of the two telcos will increase as 5G coverage continues to expand. According to Motilal Oswal Financial Services' April report, Jio is likely to have a capex of INR380 billion ($4.6 billion) in FY24 and INR310 billion ($3.75 billion) in FY25, more than INR280 billion ($3.39 billion) in FY23.

In contrast to Jio's $10 billion splurge to purchase 5G spectrum, Airtel spent just half of that amount, INR430.84 billion ($5.22 billion), to acquire 5G spectrum. While Jio focused on the expensive 700MHz spectrum, Airtel acquired pan-India spectrum in 3.5GHz and 26GHz frequency bands. Airtel is able to quickly launch 5G services because it is setting up a 5G non-standalone (NSA) network, which uses a 4G core and thus requires lower investment and less time to deploy the network.

Cumulatively, Airtel and Jio have deployed 275,256 5G basestations as of July 2 this year, according to data shared by the Department of Telecommunications (DoT). Both Jio's 5G and Airtel's 5G services are available in more than 500 cities and towns now.

5G is crucial for both Jio and Airtel. For Jio it is an opportunity to attract to its network high-paying subscribers from other telcos, especially Vodafone Idea which is yet to launch 5G. On the other hand, Airtel has to ensure that it provides good 5G services to defend its customer base. It is also an opportunity for both companies to improve revenue from the enterprise segment.

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— Gagandeep Kaur, Contributing Editor, special to Light Reading

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About the Author(s)

Gagandeep Kaur

Contributing Editor

With more than a decade of experience, Gagandeep Kaur Sodhi has worked for the most prominent Indian communications industry publications including Dataquest, Business Standard, The Times of India, and Voice&Data, as well as for Light Reading. Delhi-based Kaur, who has knowledge of and covers a broad range of telecom industry developments, regularly interacts with the senior management of companies in India's telecom sector and has been directly responsible for delegate and speaker acquisition for prominent events such as Mobile Broadband Summit, 4G World India, and Next Generation Packet Transport Network.

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