Reliance Industries Limited (RIL) has acquired  a majority stake in cable operators Den Networks and Hathway Cable. RIL will invest Rs 2045 crore via preference shares, and purchase stake worth Rs 245 crore from existing shareholders for a total 66% stake in Den Networks. The company has also invested Rs 2940 crore via preference shares for 51% stake in Hathway Cable.

The deals are subject to SEBI approvals.

Reliance and Jio will have access to 27,000 local cable operators who are with Den Network and Hathway cable, according to a statement. RIL and RJIL will make use of:

  • Hardware and backend infrastructure of Den and Hathway
  • Tie-ups with content producers
  • Expand JioGigaFiber and Jio Smart Home

Why build your own when you can acquire?

Both Hathway and Den Networks have an established footing in the cable and broadband business.

– Hathway had 770,000 broadband subscribers, after losing 30,000 subscribers in Q2FY2018. Its broadband revenue remained constant year-on-year in Q2FY2019.
– Hathway’s ARPU also declined by 5.4% YoY. Hathway also counted 7.2 million cable subscribers in the quarter.

Den Network’s rolled out its fixed line broadband services in 28 cities this year. Den aims to reach 100 cities by this year and had over 8400 subscribers as of June 30, 2018. More importantly, Den Network had a whopping 155 million cable subscribers in 2017; broadband is a less significant arm of the company.

Remember that the companies were already facing tough competition from Jio: shares of both companies dipped when Reliance announced its home broadband offering, JioGigaFiber. RIL announced the product in the company’s AGM this July, although it had been in beta-testing beta in a few thousand homes. The company said that the connection speed will be 1Gbps, which is as good as Google Fiber in the US, and ACT Broadband and Spectra’s offering in some Indian cities. The company aimed to have 5 crore fiber connections.

Also read: JioGigaFiber debuts at top on Netflix ISP Speed Index for September 2018