Ambani's $20 bln bet on TV, telecoms may rekindle wealthy brothers' rivalry

Den Networks

07/03/2016 23:00

* Mukesh Ambani plans big spend on "last mile" of cable TV 
    * Aims for 1 mln homes by mid-year, 20 mln in 3 years 
    * Some cooperation with RCom on tower, cable networks 
 
    By Promit Mukherjee 
    MUMBAI, March 8 (Reuters) - India's richest man, Mukesh 
Ambani, is muscling into the country's cable TV sector as part 
of a media and telecoms offensive that pits him against his 
once-estranged younger brother and threatens to shake up both 
industries. 
    Ambani controls Reliance Industries  RELI.NS , an oil and 
gas behemoth that is India's most profitable conglomerate. He is 
also now targeting India's consumers, taking steps most recently 
into telecoms, where he has spent at least $18 billion on 4G 
telecoms brand RJio, due to launch this year. 
    Now, he plans to spend around $2 billion over three years to 
capture India's TV sets, two people with direct knowledge of the 
matter said, as he eyes an opportunity to use his financial 
clout in what is a highly fragmented sector. 
    Reliance Industries declined to comment on its plans. 
    Home entertainment is wildly popular in India, but it's a 
high-volume, low-margin business where many smaller local 
operators control the so-called "last mile" - the connection 
from fibre optic cable in the street into the living room. 
    Ambani's television unit has been aggressively wrapping up 
deals with hundreds of small players in a street-by-street 
effort to conquer that final hurdle in its cable TV drive, 
people familiar with the matter said. 
    It could also snap up rival operators as part of that push, 
those sources and analysts said, driving tie-ups in a densely 
populated sector that includes Hathway Cable  HAWY.NS , Den 
Networks  DENN.NS  and Siti Cable  SITI.NS .  
    One Reliance official, who didn't want to be named because 
the targets are not public, said a mid-year goal of 1 million 
subscribers would rise to 5 million homes in the medium-term. 
Within three years, the aim is 20 million. 
    Today, only 20 million homes in India have a broadband or 
another Internet connection - indicating huge potential in a 
country with a population of some 1.3 billion. There are just 
170,000 subscribers for wireless Internet through optical fibre. 
    "Once the company manages to crack the last mile... it will 
be a formidable player," said Rajev Gavi, Managing Director of 
Den Satellite Network, a leading cable operator. 
    Reliance executives say it will offer a bundled package with 
hundreds of channels and video-on-demand in high definition, 
along with broadband Internet, a landline phone and home 
surveillance. It will also offer Jio Play, its version of the 
Netflix movie and TV series streaming service. 
 
    LOFTY AIMS 
    Ambani's targets dwarf the largest current player in either 
cable or satellite TV. Until 2010, the sectors were, like 
telecoms, the preserve of Anil Ambani's Reliance Communications 
 RLCM.NS , known as RCom - though he has dominated neither and 
racked up debts of more than $5 billion chasing growth. 
    The two brothers fell out more than a decade ago after the 
death of their industrialist father, eventually splitting the 
family empire under a truce brokered by their mother. Mukesh 
took the oil and gas interests and Anil took control of RCom, 
previously run by Mukesh. 
    In 2010, they reconciled and scrapped a non-compete clause. 
    Within weeks, Mukesh snapped up the only company to have won 
a national licence in India's broadband wireless spectrum 
auction, now called RJio and set to launch by this summer. 
    Analysts say the RJio threat prompted RCom to buy Russian 
conglomerate Sistema's mobile business - the first big Indian 
telecoms deal in seven years - and it is in talks with Aircel to 
create the country's second-largest mobile operator. 
    RCom declined to comment. 
    The two have, though, cooperated in some areas. 
    RCom has a 140,000 km, pan-India fibre optic cable network 
which RJio will use under a 2014 deal, alongside its own 250,000 
km network. A Reliance push into TV will also use RCom's network 
of towers and cables. In January, the two companies signed a 
deal to share RCom's 800 MHz spectrum for its 4G push. 
    That could provide something of a cushion, but is unlikely 
to ease the pressure. As Mukesh's telecom and cable projects 
take hold, analysts and industry executives say Reliance 
Industries' clout and the scale of its effort will pressure 
smaller rivals, including RCom. 
    "If you look at each of these strategies, at the core of it, 
it's no different from what others have done," said Kunal Bajaj, 
a telecoms consultant. "But (what) the company is planning is at 
a scale that no one's done before in India." 
    ($1 = 67.0433 Indian rupees) 
 
 (Reporting by Promit Mukherjee; Editing by Clara Ferreira 
Marques and Ian Geoghegan) 
 ((promit.mukherjee@thomsonreuters.com; +91-22-6180-7516; 
Reuters 
Messaging:)(promit.mukherjee.thomsonreuters.com@reuters.net)) 
 
Keywords: INDIA RELIANCE/CABLE TV