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DEN Networks receives NCLT nod for demerger of its broadband business

Cable and broadband service provider DEN Networks have received approval from National Company Law Tribunal (NCLT) for demerger of its broadband business into a fully-owned subsidiary unit called Skynet Cable Network, as per the company’s BSE filings.

The demerger was earlier approved unanimously by company’s shareholders on March 11, 2017, DEN reiterates in its filings. DEN was operating broadband Internet services under DEN BOOMBAND.

What does this demerger mean

At the time when Indian telecom industry is facing cut-throat competition, this demerger will allow DEN to focus on its broadband business, and expand it in the country.

Also, the Indian government gives subsidies to help proliferate broadband connectivity in India, as it said that it would allocate Rs 10,000 crore from the 2017-18 budget for deploying high-speeds optic fiber at villages/gram panchayats using BharatNet.

DEN’s broadband business highlights

The company reported 193,000 broadband subscribers for the quarter ended June  2017 (Q1 FY18), up from 115,000 subscribers in the same quarter last year. However, the operator added close to 16,000 new broadband subscribers during the quarter, lower than the 18,000 subscribers it added in the last quarter.

The company made Rs 21 crore for the quarter from its broadband segment, which is up 19% YoY from Rs 18 crore in Q1 FY16. DEN’s broadband business also broke even at an EBITDA level in Q3 FY17, ended 31st December 2016.

In its investor presentation for Q1 FY17, DEN said that its broadband service is currently available in only 4 cities—Delhi, Kanpur, Jodhpur and Gurgaon with speeds ranging from 5Mbps to 100 Mbps, and it plans to expand to 15-20 cities in this year, with a focus on Tier-2 cities. The company will use either a direct or franchisee model to reach out to its customers in these cities.

Competition

In broadband space, DEN Networks directly competes with players such as Hathway, Ortel, Nextra, Airtel, State-run BSNL, amongst others.

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