RIL may buy controlling stakes in Hathway, DEN Networks; stocks rally

Shares of Hathway Cable and DEN Networks rallied up to 8 per cent in opening deals on Tuesday on reports that Mukesh Ambani led-Reliance Industries may soon buy controlling stakes in two of India’s largest cable TV and broadband service providers, Hathway Cable & Datacom, and DEN Networks, as it seeks to ramp up coverage of its ambitious high-speed broadband network.

"A transaction is likely to be unveiled on Wednesday when the boards of all three companies are slated to meet. RIL will own shares in Hathway and Den through a common entity which will become the holding company of the two multi-system operators," said a TOI report.

The move is a win-win for both the parties, feels independent market analyst Ambareesh Baliga. "This is a positive development for both, viz, Reliance Jio as well as shareholders of Hathway and Den Networks because both the companies would have found it difficult to survive on the onslaught of Jio. So, from that point of view, the takeover at a good valuation is good for the shareholders," Baliga added.

It's good for Reliance Jio because it is providing them the last mile connectivity, the analyst said. The last mile refers to the technology providing connection services to and from the user’s office or house. Last mile technology is the final connectivity leg between the telecommunication service provider and an individual customer.

In July this year at its 41st annual general meeting (AGM), the oil-to-telecom behemoth Reliance Industries (RIL) announced the launch of fixed-line broadband services branded as Jio GigaFiber. While explaining the broadband for large enterprises, Ambani had said the fixed-line broadband will mean having the ability to compete in the global marketplace, using digital tools and techniques that are powering the fourth industrial revolution.

"Jio GigaFiber will provide ultra-high-definition entertainment on large screen TVs, multi-party video conferencing from a living room, voice-activated virtual assistance, virtual reality gaming, digital shopping, and immersive experiences," Mukesh Ambani had said.

At 09:33 am, shares of Hathway Cable & Datacom were trading nearly 7 per cent higher at Rs 31 apiece on BSE while those of DEN Networks were trading at Rs 78 apiece on BSE, up nearly 3 per cent. Reliance Industries, on the other hand, was trading over half a per cent higher at Rs 1,145.45.