Anil Ambani group firm Reliance Communications will acquire Digicable, the country's largest cable TV service provider, in an all-stock deal believed to be worth about $1 billion.
The board of RCom approved the proposal for the acquisition in a meeting held on Thursday, the company said in a statement, without disclosing the value of the deal.
The new entity, named 'Reliance DigiCom', will integrate RCom's DTH, IPTV and Retail broadband operations with Digicable. Sources, however, said that the deal would create an entity valued at an estimated $1 billion (over Rs 4,500 crore), and the Anil Ambani Group would hold about 60 per cent stake in it. The remaining stake could be held by Digicable and its current promoters.
The acquisition comes within days of RCom announcing the merger of its telecom tower business, Reliance Infratel, with GTL Infrastructure in a Rs 50,000 crore (Rs 500 billion) deal.
The deal was announced after the close of the stock market, where RCom shares today fell 3.03 per cent to Rs 192.30. It had soared to Rs 204.74 earlier this week, after announcement of the tower business deal.
The Digicable deal would create Asia's largest and the world's fifth-biggest entity -- offering a full suite of digital TV, ultra high-speed broadband and voice services.
Sources said that the buyout was aimed at RCom's endeavour to further hike its ARPU (Average Revenue Per User), as Digicable's eight million homes would expand its total presence to 11 million homes -- where it would seek to push its telecom services also.
Besides, IPTV (Internet Protocol TV) services also require an integration of telecom with television, and the group sees strong growth potential in that segment.
Commenting on the acquisition, RCom chairman Anil Ambani said, "The Digital TV and Broadband space is poised for similar explosive growth in the years ahead. With this game-changing move, we hope to lead the next revolution in digital home entertainment in India by offering a world-class TV experience and ultra high-speed broadband capability to a billion people."
Established in August 2007, Digicable is the country's largest cable TV service provider. The company is promoted by Jagjit Singh Kohli, along with Yogesh Shah. Kohli, a pioneer in the cable TV and broadcasting industry, has several path-breaking achievements to his credit.
Reliance DigiCom will have a combined subscriber base of 11 million homes, the company said. RCom currently offers DTH services through its wholly-owned subsidiary Reliance Big TV and is aiming to add five million new customers every year.
