Reliance picks 66% stake in Den and 51.3% stake in Hathway

Reliance Industries agreed to buy controlling stakes for more than Rs 5,200 crore in two of India’s largest cable and wired internet services providers.

The company 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% 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% 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.

Jio has already started work on connecting 50 million homes across 1,100 cities. It will work together with Hathway and DEN and all the LCOs to offer a quick and affordable upgrade to a world-class lineup of JioGigaFiber and Jio Smart-Home Solutions to the 24 million existing cable connected homes of these companies across 750 cities. This will accelerate Jio’s commitment to connect 50 million homes with JioGigaFiber in the shortest possible time.

Mukesh D. Ambani, Chairman and Managing Director, RIL, commented, “We are glad to join hands with Shri Rajan Raheja and Shri Sameer Manchanda, two of the pioneers in the MSO industry. Our investments in DEN and Hathway create a win-win-win outcome for the LCOs, customers, content producers and the eco-system. 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. We look forward to welcoming other MSOs and LCOs to be part of this partnership. This will result in growing wireline data connectivity in India and making state-of-the-art highspeed affordable internet and digital services accessible to the widest population in the shortest possible time.”

These investments and partnerships will create a win-win outcome for the Local Cable Operators (“LCOs”), Consumers, Content providers and overall eco-system.

Local Cable Operators: Over the last 25 years, India has connected about 175 million homes with basic coaxial cable technology. This has been made possible because of the efforts of hundreds of thousands of LCOs, who operate in every neighborhood of our country. However, the LCOs have been steadily losing market share because of increasing competition from alternate technologies like Direct-To-Home (“DTH”). In fact, DTH operators have weaned away over 60 million homes from cable operators who have remained basic TV service providers. With this trend, both the LCO business model and the MSOs are under stress.

Through this transaction, Reliance and Jio will be strengthening the 27,000 LCOs that are aligned with DEN and Hathway to enable them to participate in the digital transformation of India through (a) access to superior back-end infrastructure; (b) tie-ups with content producers; (c) access to latest business platforms to improve business efficiencies and deliver customer experience; and (d) investment in digital infrastructure for connecting customers. And the LCOs will continue to do what they do best – provide localized, intimate, people-friendly and ultra-fast customer services. This will create multiple future opportunities for LCOs as Jio rolls out new services and platforms.

Consumers: In developed countries, more than 95% of homes having a TV also enjoy a fixed-line broadband Internet connection. And fixed-line connectivity in advanced nations is increasingly based on fiber optics. Reliance is committed to bringing similar infrastructure and connectivity for every Indian home, working with all participants in the eco-system including the large and entrepreneurial LCO, content producers and broadcasters.

Jio shall bring JioGigaFiber to more than 50 million homes across 1,100 Indian cities and towns, in the shortest possible time. JioGigaFiber will offer:

a) Ultra High Definition Entertainment on large screen TVs

b) Multi-Party Video Conferencing from the comfort of everyone’s living room

c) Artificial Intelligence, in the form of voice-activated virtual assistants, who obey every command of the consumer

d) Virtual Reality Gaming and Digital Shopping in a magical universe of immersive experiences

e) Smart-Home Solutions, where hundreds of devices like security cameras, home appliances, even lights and switches, can be securely controlled by their owners, from both inside and outside their homes

f) Fixed Mobile Convergence, to offer end-to-end services on an integrated network.

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