Reliance Industries spends Rs 5,230 crore in fibre-to-home initiative

In a bid to fasten it's time to market for its ambitious fibre-to-home initiative, Reliance Industries Wednesday announced majority stake buys in two cable and broadband operators for over Rs 5,230 crore.

These mark the third and fourth acquisitions by the country's largest corporate entity in the media and entertainment space in recent years after buying out the Network18 group in 2014 and picking up a 25 per cent stake in Balaji Telefilms last July.

An arm of RIL will pick up 66 per cent stake in DEN Networks which has a sizeable presence in the North by investing Rs 2,045 crore in a primary issue and Rs 245 crore to existing promoters of the Northern market operator.

Similarly, it will make a Rs 2,940 crore primary investment in Hathway to take a 51 per cent holding in the company having a sizeable presence in the Western markets. Both the target companies are publicly traded and the announcement will trigger mandatory open offers.

The acquisition will be done through an arm of RIL and not Jio. "Both the acquisitions will help us reduce the time to market for introducing the Jiogigafibre services," head of strategy and planning at Jio Anshuman Thakur told reporters. He said definite agreements to acquire the stakes have been signed by arms of parent Reliance Industries Wednesday.

Together, these two operators have a network of 27,000 local cable operators whose relationships with housing societies can be leveraged as Jio seeks to connect homes.

They reach 24 million homes across 750 cities, he said. It can be noted that RIL is targeting to initially reach 50 million homes in 1,100 cities with the new network. Thakur said both the target companies have a limited infrastructure that makes it possible for it to be upgraded to cater to add-on services of smart homes which Jio plans to offer customers.

Thakur exuded confidence that the deal will pass the competition watchdog CCI's muster as it is a large market of over 175 million homes, with only up to 15 million being collectively served by the target companies.

He said the trial services of the fibre business have already started but declined to give a specific number of the households it has reached to or has got permissions to serve. There is "good progress" on the rollout of the services first announced at the AGM earlier this year, he said, adding there is interest from all across the country.

The company has already tied up with TV stations to carry content to homes through the fibre, he said. He said a jump in the Jio feature phones has dragged down Jio's average revenue per user to Rs 131.7 for the reporting quarter, but added there is good user engagement which makes the company confident of the future.

The overall subscriber base of Jio crossed 252 million as of end September. It can be noted that RIL had in July 2017 acquired a 24.92 per cent stake in film and television production house Balaji Telefilms in a deal worth Rs 413.28 crore, giving it access to the content generated by Balaji Telefilms for use by Jio Infocomm.

Balaji Telefilms is a content producer operating across TV, films and digital platforms offering 32 original shows in Hindi, Bengali, Tamil and Gujarati. RIL ventured into the TV and content business in 2014 when it acquired Network18 Media from Raghav Bahl.

Network 18 operates general entertainment and news channels such as CNBC18 and CNBC Awaaz apart from Viacom18 through a joint venture with Viacom, which runs popular entertainment channels like Colors across genres.