Mukesh Ambani, India’s wealthiest man, is set to sign a deal with Walt Disney’s Indian subsidiary that will provide his Reliance Industries with the content for its next generation of mobile telecoms, people close to the matter said.
The deal, expected to be sealed in the coming weeks, is between Reliance and UTV, one of Bollywood’s largest entertainment groups, which Disney controls with a 50.44 per cent stake and is in the process of buying fully.
It is the first concrete move by the billionaire’s group since it acquired Infotel, the only company to have won a national allocation of fourth-generation spectrum in an auction. It will be the latest in a series of joint ventures signed by India’s largest private sector group.
Reliance, which has a cash pile of about $9bn, has formed a partnership with BP that saw the UK group acquire a 30 per cent stake in Reliance’s off-shore oil and gas interests east of India for $7.2bn. Reliance also entered the financial services sector by signing a joint venture with DE Shaw , the US hedge fund, and acquiring Bharti’s 74 per cent stake in an insurance venture with France’s Axa.
“UTV and Disney are at an advanced stage of signing a deal with Reliance that will see them using games, Bollywood and children’s content on their 4G platform,†a person close to the matter told the Financial Times.
Another person familiar with the deal said: “This is a major step for both Reliance and UTV, which will soon become Disney India.â€
Reliance, UTV and Disney all declined to comment.
Since the petrochemicals-to-retail conglomerate acquired the 4G spectrum permits 14 months ago, there has been speculation about Mr Ambani’s plans to buy a wireless voice operator in India to roll out his telecoms business.
However, according to people close to the tycoon, Reliance’s ambition is to build a more data-focused business, which will provide mobile, smartphone, tablet and computer users access to the net and online related services via a wireless broadband network.
A deal with UTV would confirm Reliance’s strategy of rolling out a data-focused business and indicate that the company could launch its operations sooner than expected.
India’s telecoms market, one of the world’s most rapidly growing with about 900m subscribers, is dominated by 2G users, who use cheap mobile devices mainly for voice and texting. Meanwhile, 3G was only recently introduced but has about 10m subscribers. 4G is yet to be launched.
Romal Shetty, head of telecoms at KPMG India, said: “I really don’t see 4G coming in immediately. It will take time. But if they don’t build an ecosystem around it, you won’t get the return on investment.â€
Disney acquired a 19.82 per cent stake from UTV’s founders earlier this year and plans to delist the Indian media group after having bought the remaining stake from public shareholders. UTV’s board has backed Disney’s 100 per cent takeover plan.
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