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Reliance Communications mounts plan to hive off DTH biz

MUMBAI: Anil Ambani-controlled Reliance Communications (RCom) has reiterated its plan to hive off its direct-to-home (DTH) business to pare debt.

Reliance Digital TV has a static subscriber base of five million.

reliance-communications-techThe company is looking to sell its non-core assets as it seeks to bring down the debt-to-EBIDTA ratio from 4.64 to around 3 in the next 18–24 months. The other measures planned are selling stake in international operations at Reliance Globalcom and a divestment in its tower business Reliance Infratel.

TelevisionPost.com was the first to report last year that RCom was looking to hive off its DTH business under Reliance Digital TV.

Gurdeep Singh RCom“We are looking to bring down our debt-to-EBIDTA ratio to around 3 within 18–24 months and are looking at monetising our non-core assets to deleverage the balance sheet,” Reliance Communications CEO (consumer business) Gurdeep Singh told investors on Friday.

“For this, we are looking at hiving off the DTH business, stake sale in our international operations at Reliance Globalcom, monetisation of our real estate assets, as well as a possible divestment in Reliance Infratel, which handles our towers portfolio,” he added.

A wholly owned subsidiary of RCom, Reliance Digital TV has the lowest market share in the DTH hierarchy. Earlier efforts to offload stake in the DTH arm have been unsuccessful.

Reliance-Digital-TV-mainIn contrast to other DTH players, Reliance Digital TV has not been aggressive on customer acquisition. Instead, the focus has been on customer retention.

This is not the first time that RCom is looking to hive off its DTH business. In 2010 the telco was planning to split its DTH and internet protocol TV (IPTV) businesses into a separate company called Reliance Digital Works. However, things did not materialise as the telco had accumulated huge debt and had to focus on bringing it down.

In between, the company was in talks to merge its DTH business with Sun Group’s Sun Direct. The deal made sense for RCom as both DTH operators are located on the same satellite. However, the talks with Sun Direct fell through and it was business as usual for Reliance Digital TV.

The partnership between Reliance Digital TV and Sun Direct goes back a long way. In September 2010, the two companies had entered into an arrangement to share their back-end infrastructure to jointly beam the free-to-air (FTA) channels. The move was aimed at overcoming bandwidth crunch and reducing operational costs.

Earlier this week, RCom and Aircel announced that they are merging their wireless operators to become India’s fourth-largest telecom operator with assets worth Rs 65,000 crore (Rs 650 billion).

RCom and Maxis Communications Berhad, promoters of Aircel, will own 50% each in the merged entity, with equal representation on the board and committees.

The merged company will have the second-largest spectrum holding among all operators, aggregating 448 MHz across 850, 900, 1800 and 2100 MHz bands. It will enjoy enhanced business continuity through extended validity of spectrum holdings until 2033–35.

The transaction will reduce RCom’s debt by Rs 20,000 crore ($3 billion), while Aircel’s debt would go down by Rs 4,000 crore ($ 600 million) on closing in 2017, the two companies said.

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