Reliance Industries Ltd. agreed to buy controlling stakes for more than Rs 5,200 crore in two of India’s largest cable and wired internet services providers as the nation’s richest man Mukesh Ambani prepares to disrupt broadband and direct-to-home TV services industry.
RIL will invest Rs 2,045 crore to subscribe to preferential shares and buy Rs 245 crore worth of stake from the promoters to pick 66 percent holding in Den Networks Ltd., according to a statement by Reliance Jio Ltd. It will also invest Rs 2,940 crore through a preferential issue for a 51.3 percent stake in Hathway Cable and Datacom Ltd.
Reliance Industries will also make an open offer to the shareholders of both the companies to meet SEBI norms. The deals are subject to regulatory approvals.
Investments in Den and Hathway create a win-win outcome for local cable operators, customers, content producers and the ecosystem, RIL Chairman Mukesh Ambani said in the media statement. “With local cable operators now as part of the Jio ecosystem, we look forward to bringing Jio’s advanced JioGigaFiber and Smart Home Solutions to more Indian homes, even quicker.”
The investments would give Ambani’s telecom arm Reliance Jio Infocomm Ltd. last-mile connectivity as it aims to gather nearly five crore broadband subscribers. That comes after parent RIL announced plans to launch JioGigaFiber—a fibre broadband network targeted at homes and businesses across 1,100 cities. The service, which will come with routers and set-top boxes for television, is expected to fuel competition in cable TV and DTH services after Reliance Jio sparked a tariff war in India’s telecom industry.
Through the investments, Reliance and Jio will be strengthening the 27,000 local cable operators aligned with Den and Hathway, RIL said in its statement. They together have 14.4 million cable and about 800,000 broadband connections.
RIL will make an open offer to existing shareholders of Den Networks and Hathway Cable. According to SEBI’s takeover norms, any entity whose shareholding in a listed company crosses 25 percent has to offer to acquire another 26 percent from public shareholders. RIL will also make an open offer to shareholders of GTPL Hathway Ltd., in which Hathway owns 37.3 percent stake, and Hathway Bhawani Cabletel and Datacomm Ltd. in which Hathway owns 51.6 percent stake.