Reliance Jio Fiber In Talks With Saudi Arabia’s Public Investment Fund To Raise $1 Billion

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As reported last month, Ambani’s plan of raising funds is not just limited to Jio Platforms but beyond that. He has also been looking forward to attracting more investments to JioFiber and held discussions with Qatar Investment Authority (QIA) for the same. 

However, it seems like he has really got the ball rolling as more investors are jumping into the pool wanting a piece of his highly lucrative project.

Now Reliance Industries aka RIL has reportedly initiated discussions with Saudi Arabia’s Public Investment Fund (PIF) on investing whopping $1 billion in Jio’s fibre assets.

This particular information comes from sources who are closely linked to the ongoing discussion. They have also mentioned that PIF began talks with RIL only after their rival Abu Dhabi Investment Authority (ADIA) re-engaged with Jio on a plan to invest the same amount in its pan-India fibre assets.

In the collective $20.8 billion funds raised by Jio Platforms, both ADIA and PIF have contributed a total $2.2 billion. However, with this additionally proposed fibre deal, it is being expected that the ties between the Kingdom and India’s biggest conglomerate will further strengthen.

An Ambani family associate has remarked that Saudi Aramco has long been negotiating to invest in Reliance’s refining and petrochemical business. But, this fibre deal has the potential to transform both Crown Prince Mohammed bin Salman and Mukesh Ambani into strategic partners from a vendor arrangement between an oil producer and a refiner.

Currently, in India, fixed broadband penetration is less than 20%. As the world has come to a halt due to the novel coronavirus, the demand and usage of broadband is an all-time high. Industry experts believe that situation is far from going back to normal anytime soon and the yearly growth in the number of wired broadband users will be a record high in the months to come.

Jio quite undoubtedly wants to take advantage of this ‘waiting-to-boom’ market space that is expected to grow 2-5 times in terms of subscribers.

RIL seems to be interested in going after the entire post-paid mobile users with the commercial launch of Jio Fibre. Jio will undoubtedly come up with lucrative ‘bundled offers’ for this segment as traditionally it has been observed that post-paid users display a higher level of stickiness than prepaid users.

Reliance’s Fiber to the home (FTTH) services has already successfully connected over 1 million users. Now, their next goal is to connect more than 500 million customers and power over 50 million homes and 15 million enterprises with high-speed fibre internet in the next five years.

As of March 31, 2020, in Jio Digital Fiber Private Limited (‘JDFPL’) and Reliance Jio Infratel Private Limited, RIL has Rs 78,107 crore investment in the form of equity and Optionally Convertible Preference Shares (‘OCPS’).

According to industry analysts, when InvIT transactions finally close, RIL is all set to receive cash in lieu of Rs 40,100 crore as non-convertible debentures (NCDs) in the tower and fibre SPVs.

In April 2019, RIL reported that two trusts – Jio Digital Fibre Pvt Ltd (JDFPL) and Reliance Jio Infratel Pvt Ltd (RJIPL) have acquired 51% stakes each in Jio’s fibre and tower units. 

Both of them are completely sponsored by Reliance Industrial Investments and Holdings Ltd (RIIHL) and were a precursor to onboard strategic investors in them.

Currently, Reliance Jio’s net debt is pegged to be at Rs 22,200 crore with an additional Rs 37,000 crore of spectrum liabilities.

Now, it remains to be seen how many investments in total can Ambani rope in for Jio Fibre in the near future. Regarding the talks between RIL and PIF, both of them are yet to respond to media queries. We will keep you updated on all future developments. Until then, stay tuned.


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