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Jio's fibre business raising Rs 27,000-crore loan

Jio Digital Fibre is raising about Rs 27,000 crore in syndicated loan from a group of banks to fund expansion.

, ET Bureau|
Updated: Apr 15, 2019, 06.50 PM IST
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The loan is primarily aimed at facilitating the demerger process through which the fibre business emerges as a standalone subsidiary
MUMBAI: Reliance Jio Infocomm’s fibre network unit is raising about Rs 27,000 crore in syndicated loans from a group of banks, three executives aware of the financing plans told ET, as the newly created infrastructure business expands to meet expected demand for its assets from sectors such as power besides telecom and internet services providers.

Lenders in the consortium include ICICI Bank, Axis Bank, State Bank of India (SBI) and Punjab National Bank, said industry executives dealing with the fund-raising.

Jio, which had more than 300 million subscribers in March, has demerged its fibre and tower business into two units — Jio Digital Fibre Pvt Ltd and Reliance Jio Infratel Pvt Ltd. Jio Digital Fibre would use the dedicated credit line. These loans, maturing in two years, would cost about 8.35-8.85%.

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“The loan is primarily aimed at facilitating the demerger process through which the fibre business emerges as a standalone subsidiary,” said one of the persons cited above.

Proceeds would be used to strengthen the fibre business and draw users from other companies and businesses. “The loan will be used to strengthen the fibre unit,” said a senior industry analyst. “Other telecom players can use this fibre network…even those in the power industry can use these assets.”

SBI is Offering Rs 10,000-11,000 Cr Loan
SBI is said to be advancing Rs 10,000-11,000 crore. ICICI Bank and Punjab National Bank have offered Rs 5,000 crore each. Axis Bank has committed Rs 6,000 crore.

These loans would also burnish credit growth profiles for the banking industry, which is seeking to extricate billions of rupees stuck in bad assets.

Reliance Group didn’t reply to ET’s query on the loans till press time. Axis Bank declined to comment. Mails to SBI, ICICI Bank and Punjab National Bank also remained unanswered.

Overall bank loans increased 13.24% on-year to Rs 97.67 lakh crore in the fortnight to March 29. Pace of credit growth in FY18 was 9.85%.

About a month ago, the National Company Law Tribunal (NCLT) allowed Jio to hive off its fibre and tower businesses into two separate units that the telco would monetise.

Bharti Airtel and Vodafone Idea, too, have either separated or are in the process of separating their fibre assets.

“Given the growing data consumption and increasing smartphone penetration, this provides RJIL (Reliance Jio Infocomm) significant competitive advantage,” rating company CRISIL had said in a note in February. “The group has recently acquired stakes in content companies, and ventured into fiberto-the-home (FTTH), for which it has also acquired Den Networks Ltd and Hathway Cables & Datacom Ltd. These are likely to provide additional cash flow streams to the group.”
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