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Reliance Communications plans to hive off DTH biz to pare debt

MUMBAI: Anil Ambani-controlled Reliance Communications (RCOM) is planning to hive off its direct-to-home (DTH) business under Reliance Digital TV as it seeks to cut debt through sale of non-core assets.

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.

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

Reliance Digital TV officials refused to comment on the matter.

Apart from hiving off its DTH business, RCOM is also looking to sell its subsidiary Global Cloud Xchange (GCX) and real estate monetisation including the Dhirubhai Ambani Knowledge City (DAKC) campus and the marquee properties in and around major cities of India.

Gurdeep Singh RCom“On the deleveraging front as stated earlier, currently we are pursuing multiple options—mostly around our non-core assets. One is on the sale of GCX, second is on the real estate monetisation, including the DAKC campus and the marquee properties in and around the major cities of India. The third one is the hive-off of our DTH business,” RCOM CEO of consumer business Gurdeep Singh told media analysts.

RCOM’s current annualised net debt to EBITDA ratio stands at 4.64 and the aim is to get this down to 3.5 by March 2017 through these initiatives.

Singh said that Reliance Digital TV has a 7 per cent share of the DTH market. “We have nearly 7 per cent of the DTH industry market share and we continue to hold our market share in the DTH business,” he added.

Singh also clarified that the 7 per cent market share is on the subscriber base and on the revenue side. “Our ARPU is similar to the average of the industry,” he noted.

Reliance Digital TV has 4.87 million subscribers. It is available at more than 35,850 outlets across 8,366 cities in the country.

Reliance Digital TV delivers over 259 channels in HD-like quality, including four exclusive movie channels and four interactive services to its subscribers.

This is not the first time RCOM is looking to hive off its DTH business. In 2010, the telco was planning to hive off 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, RCOM 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.

Reliance Digital TV and Sun Direct’s partnership 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.