The telecom venture of Mukesh Ambani-led Reliance Industries, Reliance Jio Infocomm Limited has acquired $750 million which amounts to Rs. 4,815 crores. The company obtained the money from Korean lender and will use the amount to facilitate its upcoming launch of fourth-generation (4G) services across the country.
Loan taken by Reliance Jio
The loan was backed by export credit agency, Korea Trade Insurance Corporation (K-Sure). Reliance Jio obtained the loan on 7th May and its parent company became the guarantor. The current finance is the second round from K-Sure for Reliance Jio. The company will utilize the loan to fund goods and services acquired from its significant vendors,Samsung Electronics Co. Limited and Ace Technologies Corp.
A note from Reliance Jio informed that the loan has a ‘door-to-door’ tenureextending up to 12 years. These 12 years comprise 2 years of availability period and 10 yearsfor repayment. It also said that the provision is financed by nine relationship banks of Reliance Industries. These banks are Australia and New Zealand Banking Group Limited, the Bank of Tokyo-Mitsubishi UFJ Limited, Hong Kong and Shanghai Banking Corp. Limited (HSBC), Banco Santander SA, JPMorgan Chase Bank NA, ING Bank, Mizuho Bank Limited,DZ Bank AG and Sumitomo Mitsui Banking Corp.
Investment made by Reliance Jio for its telecom venture
Reliance Jio has made an investment extending $14 billion to establish the telecom infrastructure across the country. It has not declared any date for the launch. In April, it was anticipated that the company will roll out its voice services in minimum five cities by the end of June.An analyst meeting was held on 17th April. In this, the company informed that its Chairman, Mukesh Ambani will give insight about its rollout plan in its Annual General Meeting (AGM). The company’s AGM is likely to be conducted between second and third week of June.
The capital expenditure of $14 billion that the company will be investing is around the same amount which the country’s largest telecom company, Bharti Airtel Limited has spent in its 23 years of existence. Due to the large capital involved, analysts predict that the company may incur loss in its initial years of operation.
Reliance Jio’s telecom venture
Reliance Jio is gearing up to build a telecom network widespread across the country. Through this, the company wants to offer communication services, high speed internet connectivity and other digital services in sectors like security, entertainment, education, financial services, healthcare and government-citizen interfaces.
Reliance Jio is the first company to bag a pan-India unified license in October, 2013. This license will help the company to use any technology for offering varied telecom services. It will also benefit it to give high speed 4G voice and data services. The company acquired 22 telecommunication regions across the country in spectrum band of 2300 MHz and 20 out of 22 regions in spectrum bands of 800MHz and 1800MHz.