Reliance Industries Ltd.

Reliance Industries’ telecommunication arm, Infotel Broadband Services, is in negotiations to borrow an additional $1.5 billion for expenditure on rollout of operations and buying equipment. The company had raised $1.5 billion earlier this year in two tranches. Reliance Industries has said it would spend $4 billion to launch telecom services. A sizeable part of this has already gone into acquiring Infotel Broadband, that had won licences to offer pan-India broadband services and into paying for spectrum fees.

The money is likely to be raised at 6-7% or around 200-300 basis points over the London Interbank Offered Rate (Libor), The price discovery process is still on. A significant portion of the borrowing is already underwritten by Citibank that is leading the issue. If the price discovery process is completed, then the loan is likely to be raised this week.

Reliance bought 95% in Infotel Broadband for `4,800 crore, in addition to paying `12,848 crore for 20 MHz of spectrum in all 22 service areas in India. The total amount, just over `17,600 crore or close to $4 billion, was financed through a mixture of equity and short tenure or bridge loans. The company is now replacing this with a longer-tenure debt.

Infotel was expected to launch services within eight months after receiving spectrum. However, the timelines have been extended as the company is still debating whether to use WiMax, which is an established broadband technology or a later technology called LTE, that is yet to be proved.