denlogoCable TV operator DEN Networks, currently serving 10.3 million homes pan-India, has plans to foray into broadband Internet market and acquire majority stakes in multi-system operators (MSOs) to expand its network.

Promoted by Raghav Bahl, managing director, Network18 and Sameer Manchanda of IBN18, DEN offers analog as well as conditional access system (CAS) services which is under the brand name ‘Digitelly‘. While it has predominantly analog cable TV customers (10 million), it also has 300,000 subscribers of Digitelly (as of December 2008, MPA Report 2009).

It services states of Uttar Pradesh, Rajasthan, Maharashtra, Gujarat, Karnataka, Haryana, Madhya Pradesh, National Capital Region and Kerala; Digitelly is present in 37 of 76 cities it covers. In January 2008, DEN and Star India set up a 50:50 joint venture called Star Den Media which is a content aggregator that leverages DEN’s distributor network.

To Invest Rs. 2B In Cable Network, Acquisition Strategy

Den, which is (corrected) not the first MSO in the country to go public, intends to invest Rs. 2.1 billion of the proceeds of its public offer in developing its analog and digital cable infrastructure.

Updated: Wire & Wireless India Ltd (WWIL) is a Zee Network company and the first cable TV company to be listed in India.

DEN has acquired majority stakes in 62 cable operators so far as part of its growth strategy and will continue to acquire them to widen its network coverage, both in the states in which it already has a presence and others “that have significant television viewership potential for increased digital cable penetration and revenue potential”.

Fluffing Its Offerings To Compete With DTH, But Can It?


Besides its Digitelly brand, DEN also has trademarked Excite and Cinetime as part of the value-added services bouquet it plans to offer its digital cable susbcribers, including pay-per-view services, interactive educational programmes, personal video recording and mosaic viewing.

DEN already owns the rights for 4,000 films and and is now growing its film, music and international programme collection. It plans to invest Rs. 100 million in buying content rights for them.

Other plans include

  • offering more localised content – regional language films and local events
  • launching a news channel, employing stringers (freelance journalists and TV crews)
  • standardising the look and feel of our own brand television channels and improving the quality of the programming to attract more regional and national advertisers

DEN expects these initiatives will “reduce the likelihood of subscribers switching to another digital platform such as DTH satellite television.” DEN has its eggs in all baskets except DTH – it has analog cable TV, CAS, broadband and, potentially, IPTV. There are 13 million DTH connections in the country, players include Airtel, Reliance’s BIG TV, Sun Direct, Dish TV, Tata Sky and the latest entrant – Videocon. Zee’s WWIL has recently launched Siti Satellite, a DTH in association with Dish TV and is targeting Tier-2 and 3 cities to grow. According to Gerson Lehrman Group, DEN might find it easier to launch IPTV compared to telcos as it can get its franchisees (MSOs) to quickly interconnect their cables with the last mile.

Foray Into Broadband

It has also obtained an all-India ISP (Internet Service Provider) license, according to its Red Herring prospectus and plans to offer broadband Internet. It has commenced a limited roll out in Bangalore, National Capital Region of Delhi and Kanpur. It intends to invest Rs. 250 million post the IPO in developing its broadband infrastructure and services in these regions. It has also entered into a tie up with Idea Cellular to use the latter’s fibre network within Delhi. DEN’s cable broadband will offer subscribers download speeds of 10 Mbps.

Our Take

Competition: We think DEN will have a tough task: It will be in direct competition with Airtel Broadband (offering 16 Mbps), Tata Teleservices Maharashtra (TTML)’s Power Launcher in Mumbai (100 Mbps), Reliance and Vodafone, which has recently received its ISP license. It will also be up against Hathway Datacom, private equity fund Ashmore Investment backed Digicable , InCable and  WWIL. Don’t forget that wireless broadband through data cards is also becoming popular.

Branding: The other challenge will be for DEN to build a brand – it is up against the common perception of cable TV operators as being untrustworthy and unreliable. Competition is red hot in both television distribution and broadband sectors – DEN will not only be competing for a share of the pie with the cable TV posse but aggressive DTH operators, cable broadband providers, as well as the BSNL and MTNL, who are also offering IPTV.

Targeting Tier 2/3 Cities: DEN plans to first tap its existing subscriber base to launch its broadband service, but for that, it will first need to digitise its own analog network. DEN should first invest in digitising its network in Tier-2 or 3 cities and towns where access to Internet is still poor, and perhaps look to target first time Internet users instead of metro cities.

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