Reliance Industries chairman Mukesh Ambani speaking at the inaugural session of the UP Investors’ Summit - 2018 at the Indira Gandhi Pratishthan, on February 21, 2018 in Lucknow. (Photo by Subhankar Chakraborty/Hindustan Times via Getty Images)Acquisition of majority stakes in Hathway Cable & Datacom and DEN Networks by Reliance Industries Limited (RIL) can have negative impact on the direct to home (DTH) operators and broadcasters, while being beneficial for the parties, according to India Ratings and Research (Ind-Ra) as reported by Television Post.
On one hand, the deal will resolve four big challenges facing MSOs, high leverage, large capex requirements for broadband roll-out, lack of a wide spectrum of content and competition threat from RJio, but on the other hand MSO consolidation can lead to a functional monopoly in the sector, decreasing their bargaining ability with respect to subscription revenue.
Furthermore, RJio will have around 65 lakh households connected with broadband (36 per cent of India’s fixed broadband subscriber base) and about 1.25 crore television subscribers.
RIL marketing on a large scale can bleed the smaller players out of business who won’t be able to spend as much since their reach is local or regional at best.
RIL had acquired 66 per cent stake in DEN Networks at a cost of Rs 2,290 crore and 51.3 per cent stake in Hathway Cable and Datacom at a cost of Rs 2,940 crore.
Using the subscriber base and broadband infrastructure, RIL can boost its last mile connectivity to give the required push to Reliance Jio Infocomm for its ambitions in the fibre-to-the-home (FTTH) space.
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