Record deal behind record-time 5G rollout in India

One of the world’s fastest growing economies, India is also home to the world’s fastest growing 5G network. A new 5G cell is put up every 10 seconds, largely thanks to the current monumental rollout of 5G equipment from Sweden’s Ericsson by Reliance Jio, the country’s largest telecom operator in terms of subscribers.

Reliance Jio has received a USD 2.1 billion equivalent financing supported by EKN for 5G equipment from Ericsson, making it the largest guarantee ever provided by EKN for a deal to a private corporate globally.

Ingrid Furukvist, Senior Financial Advisor at Ericsson calls the rollout “historically massive” and adds, “5G was first launched in India in October 2022, and there will be pan-India connectivity of 5G by the end of 2023. It’s also expected that by 2028, over 50 percent of mobile users will be on 5G.”

As for the role EKN played, Furukvist adds, “Being able to offer an attractive export credit solution mattered a great deal.”

Few markets stand to benefit as much as India from enhanced communications. “Mobile networks continue to play a pivotal role in driving social and economic inclusion in the country. The strong digital infrastructure will help the country bridge the digital divide, create jobs, drive entrepreneurship and boost the economy,” says Furukvist.

5G technology enables large volumes of data transfer with minimal lag and plays an important role in achieving India’s digital inclusion goals, especially in bringing broadband to rural and remote homes. “Given that average data traffic per smartphone in India is already the highest in the world, the potential that 5G can unlock is tremendous,” adds Furukvist.

5G subscriptions in India are estimated to account for over 50 percent of mobile subscriptions in the country by the end of 2028, making it the fastest growing 5G region in the world. Average data traffic per smartphone is projected to grow from 26 GB per month in 2022 to around 62 GB per month in 2028 – a cumulative average growth rate of 16 percent per annum.

“A landmark transaction”

The 2.1 billion equivalent USD financing covered by EKN is divided into a EUR facility and a USD facility, with HSBC acting as ECA Coordinator and Mandated Lead Arranger (MLA) and JP Morgan SE as Facility Agent and MLA. Other MLAs include Bank of America, Citibank, ING Bank, JP Morgan Chase Bank. KfW Ipex Bank and Standard Chartered.

Christian Göransson, Director Northern Europe, Export Finance at HSBC in London, says the deal is “one of the biggest of the year globally and a landmark transaction that we are delighted to have coordinated and be part of.”

Given the sheer size of the deal, Göransson is impressed with the swift process. “Less than six months from when talks began to conclusion is certainly quick and a testament to the hard work put in by everyone involved.”

At JP Morgan Chase Bank in Singapore, APAC Regional Head Xian Lin Mah points out that Reliance Jio is a technology disruptor. “Similar to what they did in the 4G market, they are seeking to provide best-in-class 5G network connectivity and services through this large-scale project of connecting India, bringing convenience and improving livelihood for the citizens, and in doing so – maintain their dominant position in the India telecommunications space.”

Ericsson’s Furukvist adds that 5G will bring benefits to many different sectors of Indian society. “Indian farmers, for example, can employ drones surveying the fields to help plan field work and irrigation according to water supplies and precipitation to maximise their crop yields. Women can use mobile wallets to manage money, plan household expenses and take control of their finances.”

As for businesses, an Ericsson-Arthur D Little study predicts 5G will enable Indian mobile service providers to generate USD 17 billion in incremental revenue from enterprises by 2030. Much of this is projected to be driven by the adoption of 5G in the manufacturing, energy and utilities, ICT and retail industries. Indian enterprises consider 5G to be the most important technology for their digital strategies.

Time-critical mobile applications

Reliance Jio is the only Indian operator with a so-called 5G Standalone (SA) network, built from scratch and not based on previous generations of mobile technology. This requires faster rollout.

To India, improved reliability and lower latency is particularly important for time-critical mobile applications such as telemedicine and broadcasts from the nation’s favourite pastime – cricket.

At EKN, Senior Underwriter Malin Tegnér Larsen says EKN is proud to support Ericsson and Reliance Jio in rolling out network deployments that help drive social and economic inclusion. “This strong digital infrastructure will be key to enable India to bridge the digital divide, create jobs, drive entrepreneurship and boost the economy.”

In conclusion, HSBC’s Göransson says: “EKN used all the tools at their disposal, coupled with tremendous knowhow and experience of ECA financing and telecoms, to arrive at a competitive solution in a short period of time, ultimately resulting in a flexible and attractive financing.”