Mumbai: Television cable service provider Den Networks plans to invest Rs1,000 crore over 3-4 years for rolling out digital cable networks in India, a senior official told Reuters on Monday.
Last week, India approved an ordinance on digitization of cable network, in a move that boosted the prospects for cable television service providers and broadcasters.
India had been working to amend broadcasting rules with a view to fast track complete digitization of cable broadcasting in the country. The ordinance was to mandate complete cable digitization in the top metro cities by 2012 and pan-India by 2014.
Out of its total investment, Den plans to invest Rs400 crore on the first phase of cable digitization.
Cable TV operators like Den who have been facing competition from direct-to-home operators in India are confident of achieving a significant jump in subscriptions in the coming years post digitization.
“We are hoping to add 2.5 million subscribers in the first phase. If all goes well, we plan to finish the first phase by April 2012,” S.N. Sharma, president said in an interview.
The company, which has a total subscriber base of 10.5 million, has been adding 0.7 million subscribers annually on their cable networks.
Den also said it plans to fund the first phase investment via an equal mix of internal accruals and debt.
Rival Hathway Cable had said it will invest Rs500-600 crore on cable digitization by 2014 and is planning to invest Rs700-800 million on the first phase.
Analysts have viewed this ordinance as a positive for direct-to-home (DTH) and cable service providers such as Den, Hathway, Dish TV, Videocon DTH and Bharti Airtel.
Brokerage IDFC expects gains for nationalized multi-system operators (MSO) such as Den and Hathway to be “far sharper.”
“Against a backdrop of extremely poor execution and muted subscriber addition of less than 0.5 million subscribers annually, we now foresee a near 3x jump in digital subscriber addition for these MSOs in the next 12-18 months,” it said.
Den Networks which expects consolidation in the cable industry post the ordinance is open to acquiring or considering the merger of smaller multi system operators with itself.
“Consolidation will happen automatically. And there will most definitely be some consolidation by way of merger, acquisition or by some operators getting locked out in the next 3 years,” Sharma said.
“We have been in the process of consolidation of LCO’s (local cable operators) and are open to and considering MSO consolidation opportunities,” Sharma said.
The company also plans to rollout broadband services in the areas where it completes its first phase of digitization.
“We are doing the trail run and are in the process of making our plans and we will unfold them in the next 3-4 months,” Sharma said.
Shares of the company, which the market values at $241.6 million, have fallen 50% from the start of the year compared to a 17% fall in the main index.