MUMBAI: A few months after Hathway Cable & Datacom moved out its cable TV business to a wholly owned subsidiary while retaining the broadband operations in the parent company, the first top-level exit has taken place.
Hathway video business CEO TS Panesar, who had moved in from Star India, has resigned after spending two and a half years in the cable TV company. A formal announcement on this is expected to be made soon, a source familiar with the development said.
Coming from a broadcast background and spending 20 years in the industry, Panesar played a big role in making the cable TV operations process-driven and launched value-added services (VAS) to fuel the company’s future growth. Hathway Connect, an online portal for local cable operators (LCOs), was launched to empower them to increase their revenues, reduce operational costs and introduce transparencies.
Panesar’s exit follows the departure in November of Hathway Cable & Datacom MD and CEO Jagdish Kumar. After Kumar’s exit, Hathway restructured its top management team. Rajan Gupta, who had been serving as president of the broadband business since 2014, took over as the new MD of the company. His mandate was to build on Hathway’s leadership in broadband and video business and take it to the next phase of strategic transformation. Panesar, who was serving as president, was named CEO of the video business.
Panesar departs from the company at a time when the cable TV business has just been transferred by way of slump sale to Hathway Digital. The exercise was completed as of 31 March 2017.
When a successor replaces Panesar, he will live in a new period of the company’s journey. With digitisation nearly complete, Hathway’s cable TV business will require less capital than the broadband expansion programme. The separation of the businesses means that it will enable focused attention to each of them and create independent structures for future fund raising.
As part of this ambition, Hathway Cable & Datacom has announced an investment plan of up to Rs 1,000 crore in the next three years to expand its broadband business. Out of this, South India should consume about Rs 500 crore. The target is to add one million broadband subscribers during this period.
Hathway Digital, the cable TV arm, has no such heavy expenditure to make at this stage. The multi-system operator (MSO) will have to sort out its internal house than go more outdoor to hunt for new subscribers in new geographies. The drive will be to get more revenue out of the LCOs, increase consumer ARPU (average revenue per user) and launch additional VAS.
A lot of Panesar’s energies have been burnt in this. Hathway Connect was launched across markets. It is only in north India and Hyderabad that Hathway Connect is yet to be introduced. His focus has also been to introduce processes and increase ARPU in digital addressable system (DAS) Phase I, II and III areas.
In the changed milieu, Hathway’s broadband revenue has stayed ahead of its cable TV subscription income at the standalone level for the last three quarters. This trend will continue at least until the company drives up its revenue share from LCOs.
Explaining the rationale behind the decision to transfer the cable TV business to a wholly owned subsidiary, Hathway had said that, as broadband was the primary growth driver of the business, it was preferable to retain the potentially more profitable business in the parent entity. “Public investors will benefit from direct stake in the parent entity housing the high growth potential business. Transfer of the cable business to the wholly owned subsidiary would retain the value within Hathway Cable & Datacom,” the company stated.
Among other things, Panesar aggressively grew Hathway in DAS Phase III areas and led the company’s foray into VAS. He spearheaded the launch of an ad-free value-added service called ‘Hathway Special’ for subscribers who wanted content over and above the TV channels of broadcasters.
While scaling up these exercises, Panesar’s successor will also watch the performance of GTPL Hathway, in which Hathway Cable & Datacom is a key shareholder, on the bourses. The shares of GTPL Hathway will list on the BSE and NSE on 4 July.
New challenges will surround the new successor as the ecosystem changes for cable TV networks and broadband becomes an important revenue driver.