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DEN gets board approval to demerge broadband biz
MUMBAI: DEN Networks is demerging its broadband business into a wholly owned subsidiary called Skynet Cable Network.
The multi-system operator (MSO) has received board approval for this. The regulatory approvals are being awaited.
DEN is not looking to list the demerged entity.
There will be no change in the shareholding of the company and Skynet pursuant to the scheme of arrangement.
The scheme will involve cash consideration based on the net value of the assets and the liabilities of demerged undertaking.
The demerger is meant to achieve structural and operational efficiency, enhance competitiveness and greater accountability, accelerating value creation for shareholders, as well as to focus on the ISP business and on the significant growth potential of high-speed data and related services in India.
The scheme is subject to approval by shareholders, creditors, high courts, stock exchanges, Security & Exchange Board of India (SEBI), and other applicable regulatory and governmental authorities.
Earlier, Hathway Cable & Datacom and IndusInd Media and Communications (IMCL) had demerged their broadband businesses into Hathway Broadband and Planet E Shopping respectively.
A key reason for demerging broadband businesses is the lack of clarity on whether MSOs have to pay 8% adjusted gross revenue (AGR) as licence fee on only the broadband business or the company’s total income, including cable TV.
The turnover of the broadband undertaking for FY16 was Rs 40.63 crore (Rs 406.3 million), which is 3.53% of the company’s total turnover.
The board also approved a composite scheme of arrangement between direct/indirect subsidiaries of the company with another wholly owned subsidiary of the company subject to receipt of requisite approvals.
As already reported by TelevisionPost.com, DEN will merge 23 subsidiaries in the cable TV business with itself.