Reliance acquires 58.92% stake in Den Networks, 51.34% share in Hathway

Reliance through its network of subsidiaries has acquired 58.92 per cent in Den networks and 51.34 per cent in Hathway Cable and Datacom Limited. Hathway enjoys over 52 per cent share of the total MSO cable broadband market in India with 7.7 lakh subscribers, and has the ability to reach 5.5 million homes. A per TRAI, Hathway cable and datacom has 3.58 per cent market share in the wired internet subscriber category. DEN, on the other hand, claims to have the ability to reach 9.7 lakh homes but currently has around 106,000 broadband subscribers. Hathway Cable is owned by the Raheja Group, while Sameer Manchanda owns DEN Networks. They both are amongst the biggest players in the cable broadband market.

"Reliance is now committed to take India from a global rank of 135th to among the top-3 countries in the world on wireline digital connectivity," a company said in a statement, adding that Reliance Jio wants to bring JioGigaFiber to over 50 million homes across 1,100 Indian cities and towns, in the shortest possible time.

Following are the terms of the takeover.

Den networks

The Reliance subsidiaries that have bought 58.92 stake in Den include Jio Futuristic Digital Holdings Private Limited, Jio Digital Distribution Holdings Private Limited and Jio Television Distribution Holdings Private Limited together with Reliance Industries Limited Digital Media Distribution Trust Reliance Content Distribution Limited and Reliance Industrial Investments and Holdings Limited, which acted as persons acting in concert with the acquirers.

Hathway Limited

Similarly, other subsidiaries of Reliance, which bought 51.34 per cent stake in Hathway, include Jio Content Distribution Holdings Private Limited, Jio Internet Distribution Holdings Private Limited and Jio Cable and Broadband Holdings Private Limited together with Reliance Industries Limited Digital Media Distribution Trust Reliance Content Distribution Limited  and Reliance Industrial Investments and Holdings Limited. These companies also acted as persons acting in "concert" in the takeover.

As per the Sebi filings, Reliance Jio will acquire 90.88 crore equity shares of Hatchway constituting 51.34 per cent of the HCDL Expanded Voting Share Capital. HCDL directly holds 4.1 crore equity shares of the company constituting 37.32 per cent of the voting share capital of the GTPL Hathway and is classified as a promoter of the target company.

HCDl and its wholly owned subsidiary, HMVPL holds an aggregate of 51.60 per cent voting shares of GTPL Hathway Limited. After the completion of the deal, Reliance Jio would hold 51.34 per cent stake in HCDL, thus getting the controlling stake in its subsidiaries too.

After disrupting the telecom sector, Reliance Jio seems well on its way to start another 'tariff war' -- this time in the cable and digital content and broadcasting market. Reliance Jio is building a robust digital content ecosystem in the country, which will get a huge boost after the official rollout of its fixed broadband service, called GigaFiber.

The acquisition gives Reliance access to 24 million existing cable connected homes of these companies across 750 cities, thereby covering around half of its target to connect 50 million homes across 1,100 Indian cities. This could also give both Airtel and SITI cable, who are prominent players in the broadband segment, a run for their money.

The shares of Hathway and Den have been climbing since the news was made public earlier in October. Since then the shares have gained over 20 per cent and 30 per cent, respectively.