Reliance Jio scores largest samurai debt by any Asian corporate ever

Reliance Jio has secured about $500 million in debt from Japanese banks including Mizuho Bank, MUFG Bank, and Sumitomo Mitsui Banking Corporation (SMBC). The proceeds will help Reliance Jio Infocomm Limited in its capital expenditure towards creating infrastructure and enhance reach.

The term loan has enforced with seven-year bullet maturity. Importantly, the deal also marks the largest samurai loan raised by any corporates in Asian continent ever. A samurai loan comes relatively with a lower interest rate than usual debts offered by banks and other firms because of ample liquidity of Japanese investors.

The board of the company had approved Reliance Jio to raise Rs 20,000 crore debt in 2017. So far, Jio had invested over 30 billion in the 4G cellular network.

Currently, it has about 168 million subscribers.

After betting a total investment of over $30 billion to break into India’s cellular market, the mobile carrier is likely to spend over $23 billion as it eyes areas beyond wireless services. A large chunk of the estimated investment is likely to deploy towards fiber-to-home, digital TV, and the enterprise business, as per Moody’s Investors Service estimate.

The group’s bet on Jio would be monetised through bundling of content and services in the subscription. It has a long-term strategy of building digital dominance in the local market (through cellular and strong content and services) as Verizon and AT&T did in the US.

To gain more foothold amongst youths, the Mukesh Ambani-led group is in talks with the US chipmaker Qualcomm to make laptops with built-in cellular connection for the Indian market.

After disrupting telecom, Reliance Jio has also been beefing up its stakes in complimentary verticals such as content. It already had bought significant equity in EROS, ALTBalaji and recently acquired music streaming portal Saavn.

Notably, it’s eyeing to enter e-commerce market by leveraging its vast network and subscribers in the country. The company is working with kiranas stores and consumer brands to create an operational model that will enable shoppers to buy at neighborhood shops using digital coupons via its Jio Money platform.

Last month, Jio Payments Bank also begun operations. It’s the third cellular company to enter payments bank space after Airtel and Idea. As per IFC report,  Jio helped Indian consumers to save over $10 billion annually.

The news was first reported by Mint via PTI.