The subscriber base of 50 million household, at the current monthly broadband tariff of INR500-600 per household, represents a INR300 billion-360 billion market for RJio. The acquisition enables RJio to gain a significant foothold across western, central and northern India.Select Issuer RatingsIssuerRating/OutlookAsianet Satellite Communications LtdIND A/StableHathway Cable Datacom LtdIND A-9BHAGAT/RWPHathway Digital Private LimitedIND A-/RWPGTPL Hathway LimitedIND A-/RWPGTPL Broadband Private LimitedIND A-/RWPIndian Cable Net Company LtdIND A-/StableSource: Ind-Ra. RIL can use this last mile connectivity to accelerate Reliance Jio Infocomm Limited’s (RJio; IND AAA/Stable) foray into the fibre-to-the-home market.Advantages for Both RJio and MSOs:
The acquisition will give RIL direct access to MSOs’ vast broadband infrastructure and large pool of pay cable TV subscribers. RIL will also acquire a minority stake in GTPL Hathway Limited (IND A-/RWP). Ind-Ra believes that RJio’s target to reach 50 million household over the next three to four years looks achievable through the acquired subscribers of MSOs, higher penetration in existing markets and possible aggressive tariffs for other geographies.Ind-Ra-Mumbai-26 October 2018:
India Ratings and Research (Ind-Ra) believes that Reliance Industries Limited’s (RIL;IND AAA/Stable) acquisition of majority stakes in two multiple system operators (MSOs) – Hathway Cable Datacom Ltd (Hathway;IND A-/RWP) and DEN Networks Ltd is a win-win situation for all three players while impacting broadcasters and direct-to-home (DTH) players negatively.RJio’s aggressive marketing could lead to an expansion in the broadband market, somewhat similar to the one that took place in the wireless mobile data market. Hathway has a major presence in Maharashtra, Karnataka and Madhya Pradesh and GTPL Hathway has a strong presence in Gujarat and West Bengal.
Furthermore, Den Networks has a significant presence in northern India.5 million cable TV subscribers (nearly 7% of total TV households), who may not have broadband connectivity yet. Ind-Ra believes that LCOs may cooperate with MSOs provided there is no impact on their earnings and any fresh subscribers acquired remain associated with LCOs.RJio – Challenge of Last-mile Connectivity Addressed:Ind-Ra believes that the key rationale for RJio for the deal is to shorten the time horizon for its fibre-to-the-home foray as either competing or partnering with the highly fragmented local cable operators (LCOs) universe would be a time-consuming process. While RJio’s strategy to enter into the pay cable TV market is yet not clear, it is highly likely that R-Jio would offer bundled plan to include both the broadband and pay cable TV markets, which would negatively impact DTH Car Brake Hose Suppliers players
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