The twin deals will enable the largest private sector company in the country to finally launch Jio GigaFiber, the direct broadband service to homes across India.
With the acquisition of DEN Networks Ltd and Hathway Cable, Reliance Industries Ltd (RIL) is now closer to its plans to dominate the home broadband services sector in the country.
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The two deals will enable the country's largest private sector company to finally launch JioGigaFiber, its direct broadband service to homes across India.
Why is the deal a game changer for Reliance?
Reliance emerged as a game changer in the telecom sector by launching Jio back in 2016. The service introduced data at exceptionally low rates and it changed how Indians used mobile data forever. The launch affected the existing operators in the sector leading to exits and mergers of various companies in the segment.
The Jio GigaFiber aims to connect five crore households in the country spread across 1,100 cities. While the registration for availing the service has already commenced, their existing roadblocks affecting the materialisation of the plan.
But with the new tie up, Reliance will now be able to surpass these hurdles. While the deal may be materialising now, it's not the first time that Reliance had looked for possible tie ups to beef up its broadband operations. Last year, Reliance had carried out talks with DEN, but failed to reach an arrangement.
How DEN and Hathway tie up will boost RIL’s broadband service
One key merit of the tie up for Reliance is the customer pool that it will get from it. Hathway reportedly has over 70 lakh digital cable customers along with another eight lakh broadband subscribers. Similarly, DEN has over one lakh customers. Thus the association will enable Reliance to make a giant leap into not just broadband market, but also the general home entertainment arena that include television based entertainment.
Hathway and DEN deals likely to have overshadowed Jio results
The funds injected by Reliance Industries will be used to upgrade their existing infrastructure. The acquisitions will be done by subsidiaries of RIL and not Jio, according to a report by Bank of America Merrill Lynch.
The acquisitions cut-down time for the company to reach 24 million customers fits well with Jio's Gigafiber strategy and since the infrastructure for the new product needs to be upgraded from copper or coaxial to fiber, RIL will continue to invest, according to the American banker.
Merrill Lynch said Dish TV will be the 'most vulnerable' from RIL's acquisition of DEN and Hathway 'as it leads to a stronger competition' for Dish. This is despite Dish having a majority presence in semi-urban and rural areas.
Disclosure: RIL, the promoter of Reliance Jio, also controls Network18, the parent company of CNBCTV18.com.
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