Reliance Industries Ltd will acquire majority stakes in Den Networks Ltd and Hathway Cable & Datacom Ltd for Rs 5,230 crore ($710 million), as it cruises ahead on its plan to disrupt the country’s broadband and direct-to-home television industries.
India’s largest private-sector company by market value said in a statement it will buy 66% of Den and 51.3% of Hathway and will separately make open offers to the public shareholders of the two companies as well as a Hathway unit and associate.
The energy-to-retail conglomerate will make a primary investment of Rs 2,045 crore in Den through a preferential issue and a secondary purchase of Rs 245 crore from Den’s promoters. It will also make a primary investment of Rs 2,940 crore through a preferential issue of shares in Hathway, part of Rajan Raheja Group.
Reliance will then make open offers for Den and Hathway as per regulatory norms. It will also make open offers for GTPL Hathway Ltd, in which Hathway has a 37.3% stake, and Hathway Bhawani Cabletel and Datacomm Ltd, a subsidiary of Hathway.
The transactions will help billionaire Mukesh Ambani-led Reliance’s telecom unit, Reliance Jio Infocomm Ltd, to accelerate the rollout of its fiber-based broadband service JioGigaFiber to 50 million homes across 1,100 cities.
Reliance said it will work with Hathway and DEN as well as the local cable operators aligned with these two companies to offer JioGigaFiber and Jio Smart-Home Solutions to the 24 million cable-connected homes of these companies across 750 cities.
“This will result in growing wireline data connectivity in India and making state-of-the-art high-speed affordable internet and digital services accessible to the widest population in the shortest possible time,” said Ambani, chairman of the company and India’s richest person.
Reliance had launched its Jio telecom services two years ago and immediately disrupted the market with free voice calling, low data tariffs and a bevy of entertainment offerings. Jio’s rapid growth triggered a wave of consolidation, with Vodafone India and Idea Cellular merging while market leader Bharti Airtel Ltd snapping up several smaller rivals.
GigaFiber is the next phase of Jio’s quest for domination. Ambani had said earlier this year that Jio had already invested Rs 2.5 lakh crore in building infrastructure to expand its services across 1,100 cities.
Apart from providing broadband at high speeds, Jio’s new service would aim to provide TV streaming services in 4K resolution, along with gaming, virtual reality content, movies and music, and smart home solutions among other offerings.
The acquisitions will also help Jio take on direct-to-home (DTH) service providers such as Airtel, Dish TV and Tata Sky as well as video streaming players like Amazon, Hotstar and Netflix.
RIL is being advised by JM Financial Ltd, Citigroup Global Markets, Khaitan & Co, Cyril Amarchand Mangaldas, AZB Partners and EY LLP on this transaction.