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Billionaire Mukesh Ambani's bet on media and entertainment has many legs to it. Last week, he closed one with the acquisition of cable companies Den and Hathway, which gives him access to 24 million last-mile subscribers, something Ambani has been vying for since announcing his fibre-to-home network Jio GigaFiber in July. The latter will offer broadband, IPTV, landline, virtual reality gaming, and more in an all-in-one solution that is likely to transform the media and entertainment landscape in the country.
The Rs 52-billion cable deal is one among many media investments Ambani’s Reliance Industries (RIL) has been making over the past few months. And this will accelerate, say experts, as RIL seeks more content and services for its base of users under Jio. In telecom, Jio already has 250 million users and the plan in broadband is to have another 50 million subscribers under its belt.
Alongwith its subsidiaries, RIL has already picked up stakes in various ventures, including entertainment firms Eros International, Balaji Telefilms, Saavn, and The Indian Film Combine, giving it a presence across the media value chain. RIL already has ownership of the TV18 group (through Network18) for news broadcasting and a joint venture with US major Viacom for entertainment broadcasting as well as movie production, stitched up a few years ago.
RIL has also invested in start-ups such as Embibe (in education technology), KareXpert (in healthcare) and NetraDyne (in artificial intelligence), helping it connect the dots in an integrated media world, where consumers want entertainment, information and services at the click of a button. RIL is also expected to monetise all of this in the future, say experts, pushing up average revenue per user (ARPUs) for Jio, its telecom platform around which the content and services ecosystem is being built.
For the July-September period, Jio posted a fall in its ARPU to Rs 131.7 from Rs 134.50 in April-June and from Rs 156 a year back. This was its third straight quarterly dip in ARPU, though rivals Bharti Airtel and Vodafone Idea are expected to report lower numbers, analysts said.
According to experts, RIL’s media push as the next phase for Jio, which will see the firm integrate all ends of the value chain — from production to distribution, broadcasting to direct-to-home services in healthcare, education and gaming. “What we are staring at is the second era of Jio, which is completely integrated to the customer’s requirement,” says Deven Choksey, managing director, K R Choksey Investment Managers, who tracks RIL closely. “If the first era dwelt largely on mobile connectivity and services that would attract telecom subscribers in general including cheap data, the second era (of Jio) now focuses on landline, broadband and cable connectivity. The acquisitions of Den and Hathway are intended to beef up its presence there and the push into segments such as healthcare, education and gaming are intended to give it (Jio) a leg-up in this space,” he says.
RIL already indicated that the acquisitions of Den and Hathway would help accelerate Jio GigaFiber’s roll-out across the country. The plan includes providing an upgrade to JioGigaFiber and Jio Smart-Home Solutions to the 24 million existing cable connected homes of these firms across 750 cities in the first phase.
The second phase would see it try and woo direct-to-home subscribers (of players such as Tata Sky and Dish TV) onto its platform to beef up numbers. RIL is also looking to make its mandatory open offers to Den and Hathway shareholders shortly, including the latter’s subsidiaries GTPL Hathway and Hathway Bhawani Cabletel and Datacom. That is likely to see RIL shell out an additional Rs 6-7 billion for the transaction. “The future for RIL lies in adding value to the internet/data platform that it has created via Jio,” says G Chokkalingam, founder and managing director, Equinomics Research & Advisory. “RIL is acquiring/investing in businesses that can help it achieve this objective. They are all synergistic in that sense,” he says.
