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Digicable’s stake in Fastway Transmissions falls to 33%
MUMBAI: Digicable Network India’s stake in Punjab-based MSO Fastway Transmissions just got smaller.
Failing to invest in digital set-top boxes (STBs), Digicable’s holding in Fastway Transmissions has fallen by 16 per cent. The national multi-system operator’s (MSO) stake has, thus, thinned from 49 per cent to 33 per cent in the joint venture (JV) company.
“As we went on investing in the digital infrastructure, Digicable could not pump in capital into the JV in proportion to its stake. So it has got partially diluted and currently holds 33 per cent in the company,” Fastway Transmissions founder and managing director Gurdeep Singh told TelevisionPost.com.
When Fastway Transmissions started in 2008 as a JV, Singh held 51 per cent stake in the analogue cable business while the rest was with Digicable. In the digital side of the business, Singh was a distributor.
“After a year, Digicable had some financial problems. So we took share in digital as well. In the current shareholding structure, we hold 67 per cent stake in both analogue and digital cable,” Singh elaborated.
In a sign of how fragile Digicable’s fund position is, the national MSO has retrenched from many markets across India while in some cities where digital addressable system (DAS) has been implemented it has shrunk in size due to its inability to procure STBS. After private equity firm Ashmore exited with its investment of $240 million going sour, the financial support promised by Sahara dried up. Now the original promoters Jagjit Singh Kohli and Yogesh Shah have had to fund the financially-distressed company.
As reported earlier by TelevisionPost.com, Fastway Transmissions is planning to raise capital through an initial public offering (IPO) to fund its digital cable and broadband business. Singh said that the company may file draft with market regulator SEBI for an IPO next year.
So will Singh’s stake drop below 51 per cent? “I will not fall below 51 per cent. My guess is that I will offload 16 per cent and Digicable will also cut down its stake. All this, though, will depend on the valuations that we get. The IPO could be in the range of Rs 400 crore (Rs 4 billion). But it is too early to give an indicative size as there is still time for that,” Singh said.
Fastway Transmissions, which is the dominant MSO in Punjab, has spread out its services to Himachal Pradesh, Haryana and the Union Territory of Chandigarh. The MSO has deployed 600,000 STBs in Amritsar, Ludhiana and Chandigarh which fall under Phase II of DAS. The rest of the cities where it operates fall under Phases III and IV.