The deal will help Jio achieve chairman Mukesh Ambani’s next target of acquiring 50 million wired broadband subscribers.
With an aim to convert its greenfield venture in the field of fibre-based wired broadband into a brownfield project, to offer services ranging from entertainment to e-commerce, Reliance Industries on Wednesday said that its wholly-owned subsidiary, Reliance Jio, will buy majority stakes in Den Networks and Hathway Cable & Datacom for Rs 5,230 crore.
The deal will help Jio achieve chairman Mukesh Ambani’s next target of acquiring 50 million wired broadband subscribers. Since the fibre-based wired broadband business is complex and time consuming, acquiring customers from scratch can be a herculean task, so through these stake purchases, Jio has acquired a ready-made base on which it can grow. The combined cable connection of these companies stand at 24 million across 750 cities. This means that these many users can readily be converted into Jio’s wired broadband customers thus accelerating its 50 million target.
The wired broadband market in India is very small as on date with a total user base of around 18 million. Of this, the highest subscribers belong to state-owned BSNL which has a user base of 9.18 million. Bharti’s customer base is relatively small at 2.21 million.
Jio will make a primary investment of Rs2,045 crore through a preferential issue under Sebi regulations and secondary purchase of Rs 245 crore from the existing promoters for a 66% stake in Den. Further, it will make a primary investment of Rs2,940 crore through a preferential issue for a 51.3% stake in Hathway.
Jio would also make open offers to minority shareholders of GTPL Hathway, a company jointly controlled by Hathway with 37.3% stake, and Hathway Bhawani Cabletel and Datacomm, a subsidiary of Hathway.
“Our investments in DEN and Hathway create a win-win-win outcome for Local Cable Operators (LCOs), customers, content producers and the eco-system,” chairman Mukesh Ambani said in a statement.