Reliance Jio Infocomm is ready to finalise a $1.7 billion deal with Finland-based Nokia to buy 5G network equipment, The Economic Times (ET) has reported citing people aware of the development.
The contract is likely to be signed on Thursday, July 6, at Nokia's headquarters near Helsinki. Senior executives from the Reliance Group and representatives from the banks that are financing the purchase will be present, the people cited above told the newspaper.
Reliance's purchase from Nokia is in addition to the $2.1 billion worth of 5G equipment that it is already buying from Sweden's Ericsson. The purchases are part of Jio's arrangements as it plans to roll out its 5G services across the country by the end of this year, the report said.
Who is financing the purchase?
Global banks like HSBC, JP Morgan, and Citigroup are among the several banks that will be lending money to Jio to finance this 5 G equipment from Nokia and Ericsson. The total loans stand at around $4 billion, the ET report said.
To provide additional comfort to these lenders, Finnvera will be issuing guarantees as they extend the offshore loans to Jio. Such guarantees also reduce the cost of overall funding for the borrower.
Where does Jio stand in the 5G business in India?
As things stand, Jio is the sole holder of 5G airwaves in the highly efficient 700 MHz band. Moreover, Reliance Jio has opted for the standalone mode, meaning it will not be dependent on the existing 4G network as the company plans to roll out its 5G network connectivity across the country. Jio is primarily working with European companies such as Ericsson and Nokia to acquire the required equipment and hardware.
Reliance Jio has made preparations to invest around $25 billion to develop its 5G network, $11 billion of this investment has already been spent buying the 5G spectrum last year. The remaining $14 billion will be spent in the next four years in developing network assets, the report said.