Reliance Industries wants to speed up the launch of Jio GigaFiber. In a bid to do that the company has initiated talks with Hathway. Hathway Cable and Datacom is India’s largest cable operator. RIL plans to buy the company so that Jio GigaFiber can reach the people sooner. They are doing everything to bring forward the commercial launch of their high-speed broadband services.
Hathway Cable and Datacom
Hathway is a cable company that operates multiple systems. In other words, it signs carriage and content agreements with broadcasters. It then provides its services to the local cable operators. The company’s average broadband business revenue (ARPU) per user in the June quarter was approximately Rs.710 per month.
Moreover, Hathway has more than 8,00,000 broadband and around 11 million digital TV users. The company’s promoter Raheja Group holds 43.48% shares of Hathway.
At the end of FY 2017-18, Hathway had a debt of around Rs.1,617 crore. The company is looking at ways to deleverage the balance sheet in the next couple of years by Rs.500 crores. Since July this year, Hathway’s promoters have planned to infuse Rs.350 crore in the company spread over the next 18 months. The capital infusion will take place in the form of long-term unsecured loans and equity.
Rajan Gupta, MD, Hathway, disclosed that the company received Rs.100 crore in July and another Rs.100 crore by August end. The balance Rs.150 crore would be received by them by March 2020. Besides this, in the next few months, the company will be earning Rs.150 crores from its operations.
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RIL’s Acquisition of Hathway
Both Hathway and RIL have refused to comment on the development but insider sources confirm the news. According to them the talk between the two is still in its initial stages and all talks about the deal are still on an exploratory basis. They also revealed that even though it is not yet clear whether the negotiations will turn positive, RIL is pursuing this contract quite aggressively.
Rs.2,500 crores are the valuation figure that is being bandied around. If this agreement goes through Reliance Jio will get a jumpstart in the cable broadband business. Reliance Jio will get Hathaway’s massive digital cable TV and broadband user base where almost 90% of subscribers have over 40 Mbps of high-speed plans.
Not Reliance’s First Walk in the Park
Reliance had made an attempt to acquire another cable operator before Hathway. Last year in September RIL was in advanced talks with DEN Networks promoter Sameer Manchanda regarding a possible buy-out. When negotiations failed, Reliance Jio decided to launch Jio GigaFiber as a complete part of Reliance Jio Infocomm.
According to one of the internal sources, various business plans get discussed simultaneously at Jio. He revealed that Jio had earlier planned to purchase a big MSO and some smaller ones. They had mapped out on how the existing infrastructure of the MSO was to be used for providing broadband as well as video services.
Another source divulged that Reliance Jio faced resistance from LCOs (local cable operators). They wouldn’t let Jio proceed with its extension of the most important last-mile connectivity in crucial markets. This led to the delay in the GigaFiber roll-out. This is also why Reliance Jio is back in the market looking to acquire a cable operator.
According to a top brokerage firm’s media analyst, RIL has laid out the fiber and has an MSO license all ready. They are missing LCOs to reach the last mile. Acquisition of Hathway will solve that problem.
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