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GTPL Hathway, Darsh in advanced talks to set up JV for expansion in Bihar
MUMBAI: GTPL Hathway, which is tapping the capital market to raise Rs 480 crore through an initial public offering (IPO), and Patna-based Darsh Digital Network are in advanced talks to form a joint venture (JV) to expand in the Bihar market.
The two multi-system operators (MSOs) are looking to set up a 50:50 JV company. Talks are also on to stretch the JV to the Jharkhand region.
Both the MSOs currently compete in Bihar for digital cable TV subscribers. “We are in the last lap of negotiations to float a JV, with both partners holding 50% stake. Besides Bihar, the plan is to expand in Jharkhand,” Darsh Digital Network director Sushil Kumar told TelevisionPost.com.
The JV is likely to be named GTPL Darsh Network. “The target is to have one million cable TV subscribers in Bihar and Jharkhand,” said Kumar.
In Bihar, the combined strength of GTPL and Darsh is close to 400,000 subscribers. Darsh is the second-largest MSO in Bihar, but it is facing stiff competition from Siti Maurya Cable Net and GTPL.
GTPL Hathway currently operates in Jharkhand through three JV companies for offering their cable TV service. The three JV partners are for the cities of Jamshedpur, Dhanbad and Ranchi. According to market estimates, GTPL has around 250,000 subscribers in Jharkhand.
GTPL Hathway chief operating officer Shaji Mathews could not be reached for his comment.
The market in Bihar has been spoilt due to hyper-competition among the MSOs. There is under-pricing and swapping of STBs is still prevalent in the state. The decision to merge comes in this background as the MSOs feel that consolidation will help to better the collection of revenue from local cable operators (LCOs) and cable TV subscription fees could increase.
GTPL and Darsha have different encryption systems. GTPL uses Nagra Vision conditional access system (CAS) while Darsh has Chinese vendors.
The plan is to simulcrypt the system. The JV will also result in cost-saving and ARPU (average revenue per user) could increase.
The peculiarity of the Patna market is that it did not have any national MSO operating in the city until the government announced its schedule for cable TV digitisation. After a long era of independent operators, it turned into a duopoly market with competition prevailing between two local entities—Maurya Diginet Pvt Ltd and Darsh Digital Network Pvt Ltd.
In August 2012, national MSO Siti Cable (now called Siti Networks) entered the Patna market by acquiring a controlling stake in Maurya Diginet Pvt Ltd, which was a merged entity of 19 independent operators (now 18) who used to run their control rooms. The JV, named Siti Maurya Cable Net, was created for rolling out digital cable in Patna.
Almost a year later, on 24 March 2013, GTPL set shop in Patna. Thus, three MSOs service Patna, which, according to 2011 Census, has a population of 1.68 million.
As reported earlier by TelevisionPost.com, GTPL Hathway has fixed the IPO price at Rs 170 in the upper end and Rs 167 at the lower band. The issue will open on 21 June and close on 23 June.
The IPO will comprise an offer for 14.4 million shares by promoters and shareholders, amounting to Rs 240 crore. The fresh issue of shares will be worth Rs 240 crore.
GTPL was set up in 2006 by Aniruddhasinh Jadeja and Kanaksinh Rana. The Ahmedabad-based company diluted 50% stake to Rajan Raheja Group-backed Hathway Cable & Datacom in 2008. Since then, the MSO has expanded in size and spread to many parts of the country including towns in Gujarat, West Bengal, Maharashtra, Bihar, Jharkhand, Assam, Madhya Pradesh, Telangana, Rajasthan and Andhra Pradesh. Out of GTPL Hathway’s total cable TV universe of 8 million, 7.5 million are digital subscribers.