Reliance Industries Ltd (RIL) has made two strategic investments in Den Networks Ltd and Hathway Cable and Datacom Ltd. RIL made an investment of ₹ 2,290 crore for 66% stake in Den and ₹ 2,940 crore for 51.3% stake in Hathway. Mint looks at what the deal means for the sector.
What do the Hathway and Den deals mean for Reliance Jio?
Reliance Jio Infocomm Ltd’s deals with Den Networks Ltd and Hathway Cable and Datacom Ltd may not only allow the company to expand its presence to 1,100 cities and target 50 million homes with its faster broadband services, but also reduce the cost of reaching out to customers. Additionally, deals with Hathway and Den will help Jio GigaFiber achieve last-mile connectivity, overcoming the challenges the company has been facing from local cable operators who have in past stonewalled its expansion plans. The deal could also bring down Reliance Jio’s FTTH capex of $130-140 per subscriber, according to analysts.
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When did the deal talks start? Will RIL be involved in day-to-day running of the firms?
The talks for Reliance’s strategic investment in Hathway and Den Networks have been on for over a year now, according to people familiar with the matter. As per the agreed terms, the management of both Hathway and Den Networks will continue to run the company on a day-to-day basis with Reliance Industries taking a board seat. The transaction is expected to be similar to Reliance Industries’ previous investments in Eros International Media Ltd and Balaji Telefilms.
How does the acquisition help Den and Hathway?
The deal will help them partner with a bigger firm, which will not only help deleverage their balance sheets but they will have access to Reliance’s war chest of technology and funds.
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What does the broadband market in India currently look like?
The Indian broadband market currently consists of players like BSNL, MTNL, and Airtel, cable firms such as Hathway and Den Networks, and pure-play broadband operators such as ACT Fibernet and Spectra. There are several other smaller broadband players in the market too. In the recent past, Airtel has acquired Tikona, a broadband operator. During July, RIL had unveiled its fibre-to-the-home broadband plans, which is expected to be rolled out in coming quarters.
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Will RIL bring about a disruption in the cable and broadband markets?
RIL caused a major disruption in the telecom market by launching Reliance Jio in 2016. Reliance Jio’s launch and its subsequent aggressively pricing eventually saw consolidation of the domestic telecom sector. Reliance Jio saw a record net subscriber addition of 37 million during the September quarter, and reported a subscriber base of 252.3 million during the same period. RIL is expected to bring about a major disruption in the cable and broadband sector in the coming quarters.