Reliance Jio Looking to Raise ₹8,000 Crore via Bonds

According to sources and media reports, Reliance Jio is exploring opportunities to raise up to ₹8,000 crores by selling corporate bonds as soon as next week.

Reliance Jio Looking to Raise Cash

People aware of the matter have stated that the telco wants to clear spectrum dues from 2014 and 2015. Incidentally, Jio had cleared a fair bit of its spectrum dues; in October, the telco cleared ₹107.92 billion to the DoT. In the 2016 spectrum auction, Reliance Jio had bought a spectrum worth ₹136.72 billion. Back then, it had paid ₹59.30 billion as an upfront payment.

As such, the telco's only spectrum dues are from 2014, 2015, and 2021. Since the term for installments starts in the coming years for the 2014 and 2015 spectrum dues, the telco wants to clear it before the interest kicks in. As such, the fundraiser makes sense. For now, the 2021 spectrum dues are not a concern for Jio. Per industry executives, Jio's liability from 2014 and 2015 remains at ₹15,000-₹16,000 crores.

For the fundraiser, Reliance Jio is looking at corporate bonds on five-year, three-year, and two-year tenors. Sources have also reported that the bonds will come with an interest rate between 5.35% and 6.2%. For now, the telco has been talking with lenders such as Axis Bank, ICICI Bank, HDFC Bank, and SBI for the five-year series. The Mukesh Ambani-led telco will look to raise about ₹5,000 crores from these bonds. Along with this, Jio has also been talking with mutual funds for the two-year and three-year bonds, looking to raise ₹3,000 crores from there.

Sources also report that while the primary goal of the fundraiser remains clearing spectrum dues, Jio will also look to refinance three short-term loans. These loans mature in January, February, and June according to sources, and Jio will look to extend those.

Interestingly, Jio was the only telecom company that did not opt for the 4-year moratorium on spectrum payments. While the telco has no cash qualms, it has shown its intent to save itself some interest payments. According to Goldman Sachs, this move, if it goes through, will save the telco around ₹7,500 crores in annual cash flow.

Recent Telecom Sector Fundraisers

In its recently concluded first tranche of the rights issue, Bharti Airtel has managed to raise ₹5,246.85 crores. Notably, the rights issue started on 5th October and had been oversubscribed 1.44 times. In a regulatory filing, the telco said, “…the special committee of directors for the rights issue, at its meeting held today…approved the allotment of 392,287,662 rights equity shares to the eligible applicants, with ₹133.75 paid on application and balance to be paid in two more additional calls…”.

This means that the telco has raised about ₹5,246.85 crores from the first call of the rights issue. As has been mentioned by the telco, it will call for two more times, to request payments from the applicants. This also gives Airtel a bit of cash advantage; it now has two more cash injections lined up in case it needs money. And given the current trend in the telecom sector, the telcos will need money soon.

Along with this, Vodafone Idea has been trying to raise about ₹25,000 crores since last September, but to no real success.