Cable and broadband operator DEN Networks has entered into a Share Purchase Agreement (SPA) with Pimex Broadcast Private Limited to sell its entire equity stake in Macro Commerce Private Limited on a going concern basis, the company informed BSE. This stake sale will include 100% shares held by both DEN Networks and Jasper Infotech Private Limited, which runs the e-commerce marketplace Snapdeal.

Macro is the 50-50 joint venture partnership between DEN Networks and Jasper Infotech that set up the TV shopping channel known as Den Snapdeal TV Shop, in January 2015. The TV channel operated as a marketplace for selling unbranded and branded merchandise, services and third-party vouchers, to television home shopping audiences. Snapdeal was responsible for quality and delivery of the products and offered cash-on-delivery for customers.

Following the stake sale, Pimex Broadcast will take over all existing liabilities and dues of Macro, and will be responsible for settling the same. The DEN and Snapdeal branding will also be dropped from the channel.

It’s worth noting that in February this year, Snapdeal had shut down its C2C handicrafts marketplace Shopo, which it had acquired for an undisclosed amount back in 2013. The company mentioned that the app and web storefront will stop working from 10 February, 2017 and that it will continue to be available on email to help sellers. Given that in the same month, Snapdeal also laid off close to 600 people within the company’s logistics unit Vulcan Express and in its payments division FreeCharge, and is currently in the middle of a reported merger with Flipkart, the stake sale in the TV shopping channel isn’t surprising.

DEN Networks demerging broadband business

In March of this year, DEN Networks received shareholder approval for a  proposal to demerge the company’s broadband business into a fully-owned subsidiary unit called Skynet Cable Network. Currently, DEN operates broadband and Internet services under its DEN BOOMBAND brand in Delhi and NCR regions.

A demerger will help DEN focus more on its broadband business and run it as a standalone service, independent from its original branding which earlier represented DEN as a cable and broadband provider. The development is also in line with the company’s expansion plans into new cities, especially at a time when the Indian telecom industry is getting intensely competitive. With bigger telecom companies like Vodafone, Airtel, Idea, and Jio increasingly focusing on broadband and fiber, appointing a standalone management to look into broadband operations is the right way to move forward.

DEN Networks financials

DEN Networks’ broadband business reported an EBITDA of Rs 1 crore for the quarter ended March 31, 2017 (Q4 FY17), after the segment broken even on an EBITDA level in the previous quarter. The company’s broadband business posted ‘pre-activation’ revenues of Rs 22 crore, up 45% year-on-year (YoY). On a sequential basis, the growth was marginal from Rs 21 crore. The broadband segment however suffered a loss (before tax) of Rs 9 crore during the quarter, which decreased from Rs 17 crore loss in the same quarter last year.

The cable segment still accounts for the majority of DEN’s business, at Rs 302 for the quarter, which is up 25% from Rs 242 crore in Q4FY16. Cable also generated a significantly higher EBITDA of Rs 45 crore. The cable segment reported a profit (before tax) of Rs 5 crores, down from Rs 38 crore in the same quarter last year.

Related Read: DEN Networks launches a video streaming app for subscribers