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RCom’s financial woes may re-ignite deal talks between Reliance Digital TV and Sun Direct

MUMBAI: With Anil Ambani-led telco Reliance Communications looking to sell its direct-to-home (DTH) business, the move may re-ignite talks between Reliance Digital TV and Sun Group’s Sun Direct.

After all, Sun Direct and Reliance Digital TV were exploring a merger in 2013. While the merger did not materialise, DTH industry experts reckon that the match between the two is an ideal one as both of them are located on the same satellite.

The financial woes of RCom could lead to new rounds of exploration between the two DTH operators, some media analysts said. There could even be a buyout possibility, they added.

Reliance Communications, which has a total debt of close to Rs 45,000 crore, has got a seven-month reprieve from lenders to put its house in order. The company is planning to reduce its liabilities by 60% with the Aircel merger and the sale of tower assets to Brookfield.

Reliance Communications is also looking to unload its DTH business to cut its debt. It has been mulling hiving off its DTH business for a long time.

With the core telecom business under grave threat due to mounting competition, it makes sense for the company to get out of non-core businesses including DTH.

In any case, Reliance Digital TV is a minor player in the growing DTH business, which is witnessing consolidation with Dish TV and Videocon d2h merging to create a distribution behemoth having 28.31 million subscribers, as on 31 March.

Reliance Digital TV, on the other hand, has a meagre 2% share of active DTH subscriber base, according to the TRAI report.

As on 31 December, the active DTH subscriber stood at 62.65 million. Sun Direct has a 10% share of total active DTH subscriber base.

There is synergy as both the DTH operators use the Measat 3 satellite. So a merger of the beams is possible using a software update on the set-top boxes (STBs) of the subscribers.

Sun Direct will also be able to improve its spectrum situation. The DTH operator uses four transponders from GSAT 15 and four transponders from Measat 3. Out of the four transponders on GSAT 15, three were added in FY17. The addition of the transponders has enabled the company to increase the number of HD channels its offers to 55.

The addition of bandwidth will help Sun Direct to not only retain but also add subscribers while enhancing its ARPU (average revenue per user), a media analyst said.

A deal with Reliance Digital TV will mean Sun Direct can add more spectrum and HD channels.

Acquiring Reliance Digital TV will also give Sun Direct a foothold in the North Indian market. The Sun Group-owned DTH operator has largely restricted itself to the South India market.

The Kalanithi Maran-promoted Sun TV group has presence across various forms of media including television, radio, dailies, weekly magazines and channel distribution. The promoters of the Sun TV group hold 80% stake in Sun Direct while South Asia Entertainment Holding Ltd (SAEHL), a wholly-owned subsidiary of Malaysian group Astro, own the remaining 20% stake.

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