After disrupting the telecom industry with Jio, Mukesh Ambani makes a ₹52 billion play for broadband and cable dominance
Reliance Industriesis paying ₹22.5 billion to take a 66% stake in DEN Networksand ₹29.5 billion for a 51% stake in HathwayCable and Datacom.
- The ₹52 billion investment is aimed at accelerating the rollout of Reliance’s high-speed JioGigaFiber service - comprising home internet, streaming television, landline and gaming - to 1,000 cities across India.
- While the launch of JioGigaFiber was announced in July to great fanfare and a lot of signups, the service has been delayed owing to last mile connectivity issues and resistance from local cable operators.
The Mukesh Ambani-owned Reliance is paying ₹22.5 billion to take a 66% stake in DEN Networks, the country’s largest digital cable TV distribution company, and ₹29.5 billion for a 51% stake in Hathway Cable and Datacom, a cable TV and broadband services provider.
The ₹52 billion investment is aimed at accelerating the rollout of Reliance’s high-speed JioGigaFiber internet broadband service - comprising home internet, streaming television, landline and gaming - to more than 1,000 cities across India using DEN and Hathway’s existing infrastructure. It will complement Reliance’s growing prominence in the mobile space through its Jio service.
While the launch of JioGigaFiber was announced in July to great fanfare and a lot of signups, the service has been delayed owing to last mile connectivity issues and resistance from some local cable operators, who fear being priced out like Reliance’s rivals in the telecom space. The service, which will benefit from a tie-up with established internet service providers, is expected to be as much as 50% cheaper than current broadband rates - which will no doubt entice consumers.
The acquisitions make sense for Hathaway and DEN in that it is better to partner with a dominance force than compete against it. In addition to helping them deleverage their balance sheets, they will now have access to Reliance’s war-chest of technology, funds and resources to expand their offerings. For cable companies, “fiberising” their services is time and capital-intensive.
The announcement preceded the release of Reliance Industries’ results for the quarter ended September 30th. The conglomerate posted its largest ever profit for the July-September period at ₹95.2 billion, a 17% rise from last year, owing to the continued strength of Jio. The mobile service, which added 37 million customers over the period, made a profit of ₹6.7 billion as opposed to a ₹2.7 billion loss in the year-ago quarter.
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