RIL’s partnership with Hathway, Den to hit broadcasters, DTH players; India Ratings explains how

The billionaire Mukesh Ambani-led Reliance Industries Ltd’s strategic partnership with Den Networks Limited and Hathway Cable and Datacom Limited might be a ‘win-win’ for all three companies, but it will have a negative impact on broadcasters and direct-to-home (DTH) players, India Ratings (Ind-Ra) said on Friday. The deal would lead to consolidation in the multiple system operators (MSOs) market, and this, in turn, could be negative for broadcasters by impacting their bargaining power to command higher subscription revenue, Ind-Ra said.

Earlier this month, Reliance Industries announced to acquire a controlling 66% equity stake in Den Networks for Rs 2,290 crore and another 51.3% equity stake in Hathway Cable for Rs 2,940 crore, in a move to become the largest player in the broadband and the cable TV and DTH market. Once the proposed acquisition is completed, it will help Reliance Industries get direct access to MSOs vast broadband infrastructure and the large pool of pay cable TV subscribers, which the company can utilise to speed up its telecom arm Reliance Jio Infocomm’s entry into the fibre-to-the-home market.

After announcing the deal earlier this month, RIL said that the strategic partnership with Den, Hathway Cable and Datacom Limited will accelerate JioGigaFiber rollout to 50 million homes across 1,100 cities. RIL had unveiled its fibre broadband system JioGigaFiber in July in a push to make deeper inroads into the country’s wireless and fixed-line internet industry.

According to India Ratings, DTH players would be impacted negatively once Reliance Jio starts offering the bundled plan, which will include both the broadband and pay cable TV markets. Besides, the deal would also enable Reliance Jio to accelerate its fibre-to-the-home foray as joining hands with local cable operators or competing would consume a lot of time.

“On the other hand, the deal will resolve four big challenges facing MSOs – high leverage, large capex requirements for broadband roll-out, lack of a wide spectrum of content and competition threat from RJio,” it said.

Reliance Jio will get direct access to nearly 6.5 million broadband households, which accounts for around 36% of India’s total fixed broadband subscriber base of about 18 million, Ind-Ra said. On the other hand, the deal will open the routes for Reliance Jio to get access to about 12.5 million cable TV subscribers or approximately 7% of total TV households who may not have broadband connectivity yet, it added.

Recently, RIL had announced a five-year content syndication deal between its video streaming platform JioTV and Star India, which enabled Reliance Jio users to watch live sports via Hotstar easily.