The fresh debt and proceeds from Brookfield<\/a>’s proposed Rs 25,215-crore investment in an infrastructure trust that owns Jio<\/a> Infratel will be used to pay off roughly Rs 36,500 crore of the tower entity’s liabilities, comprising loans from banks and Reliance Industries<\/a> (RIL), and vendor-related dues.
The infrastructure trust “may raise an additional Rs 10,000 crore to repay\/refinance” the tower arm’s liabilities, Bank of America-Merrill Lynch, which was present at Reliance Jio Infocomm’s earnings call on Friday, said in a note to clients. Brokerage IIFL Institutional Equities estimates Jio Infratel’s liabilities are split across Rs 11,000 crore bank borrowings, Rs 11,800 crore from RIL by way of non-convertible debentures and Rs 13,700 crore of other liabilities.
“Long-term debt (is) also being raised in RJIPL... Proceeds from investment by Brookfield and long-term loans will be used to repay existing financial liabilities of RJIPL, including loans extended by Reliance,” said RIL in its analyst presentation.
Brokerage Ambit said while Brookfield and its investor partners will acquire units of the infrastructure trust holding Jio Infratel, further “clarity is needed on yield assured to these unitholders, which could set a benchmark altering rentals currently earned by Bharti Infratel\/Indus Towers.”
As per analysts, Jio’s parent RIL said it is making good progress to monetise Jio Digital Fibre under a similar deal structure, although it did not identify potential investors. Rajiv Sharma<\/a>, co-head of research at SBICap Securities, said Jio may increase tariffs once it launches its home broadband services.
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