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DEN Networks does not comment on RIL buy even as it dermerges its broadband biz

DEN Networks informed the stock exchanges that it would “not be appropriate for us to make a comment on market/media speculation/rumour” on reports that it is in talks with Reliance Industries Limited (RIL) for an acquisition. Yesterday, the Economic Times reported that DEN Networks was in talks with Reliance to buy its multi-system operator business and is looking for a valuation of around Rs 2000 crore to Rs 2200 crore.

The development comes in the backdrop of a demerger of DEN Networks’ broadband business earlier this month. The demerger was earlier approved unanimously by the company’s shareholders on March 11, 2017. DEN was operating broadband Internet services under DEN BOOMBAND.

Meanwhile, Reliance has been looking at integrating broadband internet, cable television, wired telephony and wireless telecom. Earlier this month, reports came in that Reliance Jio might soon enter the broadcast segment with its own set of DTH and IPTV services. The telco has also been testing its fiber Internet service in Mumbai with a select number of users. The service dubbed “Jio Fiber” claims to provide speeds up to 100 Mbps.

A possible acquisition of DEN Networks will give RIL a direct entry into 13 million households, including over 10.5 million digital subscribers.

Note that last year, Essel Group-promoted Siti Cable was in talks to buy DEN Networks and had pegged the size of the deal at around Rs 2000 crore.

Financials

DEN’s cable business reported a revenue of Rs 181 crore for the quarter, which is up 34% from Rs 135 crore in Q1 FY16. The cable segment reported a profit of Rs 4 crores, up from a loss of Rs 38 crore in the same quarter last year. Overall consolidated Profit Before Tax was at Rs 6 crore in Q1 FY17 compared to a loss of Rs  35 crore in the previous quarter.

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