Reliance Jio Infratel plans to raise Rs 25,000 cr for capex, retiring debt

Fund raising is separate from Reliance Jio Infocomm plans, will be completed by end of September quarter.

Reliance Jio Infratel Private Limited, which is owned 51 per cent by Tower Infrastructure Trust, an Infrastructure Investment Trust, and rest by Reliance Industries, plans to raise Rs 25,000 crore to fund its capital expenditure and retire old loans. This fund raising exercise is separate from Reliance Jio Infocomm Ltd, which is raising funds on its own from both domestic and overseas markets.

According to a source, RJIPL manages and operates the tower assets of Reliance Jio. These tower assets have been recently transferred from Reliance Jio Infocomm. “The fund raising by RJIPL will be completed by the end of September quarter,” the source said. Of the Rs 25,000 crore, almost Rs 10,000 crore will be raised as commercial paper while the rest will be long-term debt.

Another Rs 5,000 crore will also be raised by Jio Digital Fibre Private Limited which is 51 per cent owned by Digital Fibre Infrastructure Trust, an Infrastructure Investment Trust (InvIT), with the balance stake held by Reliance Industries. Both Jio Digital Fibre Pvt Ltd and RJIPL have 20-year agreements with Reliance Jio Infocomm to meet the infrastructure requirements of the telecom giant.  Both companies plan to repay their debt with assured cash flow from Reliance Jio Infocomm Ltd which will be the anchor tenant for both companies.

An email questionnaire sent to RIL spokesperson did not elicit any reply.

Reliance Jio Infocomm, a 100 per cent subsidiary of Reliance Industries, has recently undertaken a major restructuring of its assets, in which all the telecom tower and fibre optic assets, have been transferred to the two infrastructure investments trusts. Apart from these assets, Reliance Jio Infocomm will also transfer its debt worth $15.4 billion to the two trusts. This will reduce debt of Reliance Jio Infocomm substantially estimated at $26 billion.

As of now, the Tower InvIT is currently wholly owned by Reliance Industrial Investments and Holdings Ltd (RIIHL), which is the sponsor of the trusts. RIIHL, in turn, is the wholly-owned subsidiary of RIL. The Mukesh Ambani company is in talks with foreign investors including Canadian fund, Brookfield to invest in the InvIT.  The valuation of the both InvITs has been pegged at Rs 36,000 crore.

The move will help Reliance Jio Infocomm to deleverage its own balance sheet and at the same allow the two InvITs to lease the tower and fibre assets to third parties to earn revenues.