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RIL plans to pick 26% stake in leading cable operators

16 Jan 2012 Evaluate

Reliance Industries (RIL) isplanning to pick up a minimum 26 per cent stake in leading cable operators,including multi-system operators. The move is a part of the group’s strategy torope in cable operators as well as multi-system operators (MSOs) as partners toprovide last-mile connectivity to consumer homes for 4G broadband services,which would include data, voice and television. RIL is believed to haveapproached Den Networks, Digicable Networks, Hathway Cable, the Hinduja–promotedIndusInd Media and Communications Ltd (InCable) and several independent MSOs aswell as smaller operators with good regional presence. The move comesshortly after RIL decided to invest in media group TV18's two main companiesthrough rights issues. The deal would give RIL access to content for its 4Gbroadband internet venture.

RILhad last year bought 95 per cent stake in the Infotel Broadband Services Ltd(IBSL), which won broadband wireless access or 4G spectrum across the country. Infotelwas engaged in bringing affordable, cutting-edge wireless broadband andbroadband-enabled digital services to customers across the country.  With the government setting a deadline fordigitisation by 2012 in metros and by 2014 across the country, cable operatorsand MSOs would require a massive investment of Rs 25,000 crore. Den Networksplans to invest Rs 1,500 crore over three years and Hathway would invest Rs500-600 crore on cable digitisation in the first phase. According to analysts,most MSOs have chalked out huge fund-raising plans for digitisation, includingstake sales. According to a KPMG report on the media and entertainmentindustry, there were 103 million cable homes in 2010. Of those, 68 million wereconnected by analogue cables, while 28 million used DTH and five millionswitched to digital cable.

With RIL planning to roll out 4G services,tying up with MSOs will help them both in data and content options. That willhelp them in mass-scale adoption of their technology. In one go, mosthouseholds will get internet and content on several devices from television totablets. For RIL, this makes sense as MSOs have last-mile access to customers. RILhas ambitious plans to connect over 100 cities and towns across the countrythrough a fibre optic network (partly of its own and partly leased) in theinitial stages. Cable operators and MSOs together have already laid 100,000 kmof fibre reaching consumers’ houses across the country. That is what RIL wantsto leverage.

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