The Qatar Investment Authority (QIA) of the Sovereign Fund is in final negotiations with Reliance Industries Ltd. to invest $1.5 billion ( ₹11,200 crores) into an infrastructural investment trust (InvIT) that is holding the company’s fibre-optic assets. This was revealed by two people wishing to remain anonymous. Earlier this year, Reliance had managed to raise around $20 billion through the sale of stocks in Jio Platforms Ltd. Reliance now wants to fund the fibre assets of Jio Digital Fibre Pvt. Ltd.
One of the two aforementioned anonymous sources said that fibre network business monetization is precisely in the category of Reliance’s original plan of making Jio an asset-light digital services company and greatly save the costs as the company plans to provide affordable 5G Internet services. As such QIA may invest around $1.5 billion in Reliance’s fibre business.
ICICI Securities Ltd. and Global Markets, Moelis and Co. have both been approached by Reliance to work as investment bankers for this investment deal. The previous year, $35 billion (₹25,215 crores) were invested in an InvIT that holds its telecom tower assets by a consortium led by Canada’s Brookfield Asset Management. Spokespeople at Reliance, Moelis and ICICI Securities refused to give any insight. Qatar Investment Authority and Citigroup did not reply to any requests for comment either.
Jio Digital Fibre currently has a fibre-optic cable network of 7 lakh k.m. in India. It wants to extend it to 11 lakh k.m. Reliance’s Jio Infocomm decided to separate its fibre and tower businesses from Jio Digital Fibre Ltd. and Reliance Jio Infratel Ltd. This caused Reliance to write off these assets from its balance sheet. The two organisations are now functioning independently, with Reliance Jio Infocomm as the sponsor.
As per the current plan, Reliance Jio Infocomm will continue as the sponsor of the InvIT and while keeping a minimum 15% share in the company, with the rest 85% being sold to global investors, including QIA. This investment in Jio Fibre comes after a decision taken by Indian tax authorities not so long ago of not collecting taxes on investments made by sovereign funds in the infrastructural sector of India.
In its annual report at the end of the fiscal year, Reliance said that Jio’s 5G ready network and substantial fibre assets would have a pivotal role in the making of the 5G system in India.
The report wrote that Jio’s expansive intracity fibre network, last-mile execution, flawless customer experience, coupled with attractive bundling of digital content and smart home Internet solutions, would make the main differences.
Jio is said to have plans to provide top of the edge wireline services, of which all are 5G ready.