To ramp up its operations for Reliance Jio GigaFiber and to establish robust last mile connectivity, Reliance Industries Limited, the holding company of Reliance Jio will buying stakes in cable TV and broadband service provider companies Hathway Datacom and DEN Networks. This buyout would help the telecom entrant in gearing up for full-blown execution of its audacious plans for the Reliance Jio GigaFiber high-speed internet service.
Acquisition Crucial for GigaFiber Rollout
As per people aware of the matter, Reliance Industries Limited is likely to acquire a share of more than 25% in both these companies. This move will get Reliance Jio a seat in the board along with the power to control developmental strategies for both of these companies. The promoter stake is also expected to see a sharp slump as Reliance is going to be eyeing open offers.
Both the parties have already informed the stock exchange that the respective boards are meeting on October 17. These meetings will hold discussions about raisings funds and approving the proposal. As per the update, the decision is expected to be announced in a few days.
Hathway and DEN Major Forces in Connectivity
To recall, Hathway Cable is right now owned by Raheja Group whereas Sameer Manchanda owns DEN Networks. With the investors catching a whiff of a buyout by Reliance Jio, the shares of both the companies have been climbing up. While Hathway shared closed at Rs 28.95 per share having climbed up 6.04% on BSE, the DEN shares were trading at Rs 75.65 at the market close indicating a rise of 10.84% in the prices.
As per an ET report, a highly placed source talked about the deal and said “Both Hathway and DEN will issue fresh shares. The fine print of the deal is being worked out.” The official pointed out that Reliance would own more than 25% in the companies and less than 50% to strike a balance.
Reliance Jio’s Second Attempt at DEN Network’s Stake
One of the people aware of the matter said, “RIL continues to look at various business plans at any given point of time. But the past two months have been crazy and totally under the radar. The plans are ready on how to use the existing infrastructure of MSOs (multiple system operators) to give both video and broadband services.”
It’s noteworthy that last year Reliance Jio had also begun talks with DEN Networks to acquire a stake in the company. However, the discussions couldn’t come to fruition. This year, Reliance Jio is aiming to get a stake in Hathway to supplement its Reliance Jio GigaFiber venture actively.
The experts have already said that the combined 7.2 million digital cable subscribers under both the companies across 350 and 200 cities will be a significant boost for Reliance Jio. On top of that, Hathway enjoys 52% share in broadband connections across the country with 0.77 million subscribers and 5.5 million homes within its reach, whereas DEN boasts of 0.97 million homes under its umbrella and 106,000 broadband subscribers.
The official also remarked about this move by Reliance Jio saying, “There is no or very less overlap in the two cable markets. While DEN is strong in Uttar Pradesh and north India, Hathway is strong in central and western India. Also, with five DTH players, none of the operators is in a dominant position in any market, so there is no question of monopoly.”