The Hindu Business Line : PowerGrid plans foray into entertainment business

New Delhi, Dec 18 Power Grid Corporation of India Ltd – the nodal agency for wheeling power across the country – is planning a foray into the entertainment space and is in talks with Zee Network Ltd for a possible joint venture.

Post-listing, the state-owned power transmission major aims to leverage its extensive fibre optic telecom network to stream entertainment content in order to secure higher returns on investments, more than the regulated returns of 14 per cent that it gets from its core business of power transmission.

“The move by the company to rent out its fibre optic infrastructure is in line with its plans to diversify into areas with high returns and low incremental costs. While the power transmission business generates stable return on equity of 14 per cent, the entertainment business has the potential to rake in higher returns through minimal investments on infrastructure,” a Government source involved in the exercise said.

PGCIL owns and operates the bulk of the country’s inter-state power transmission assets and transmits about 45 per cent of the power generated in the country. It has also developed a 19,000-km fibre-optic telecom network, principally using its overhead transmission infrastructure, and now leases bandwidth to all major telecom players. The company, which raised Rs 2,984 crore through its IPO, plans to expand its telecom and consultancy business, besides the proposed entertainment foray, in a bid to shore up returns. PGCIL is betting on new businesses to contribute a fifth of its total revenues over the next three years, from less than 10 per cent at present.

The company is already investing heavily in its telecom business and plans to infuse up to Rs 2,000 crore in expanding its fibre-optic network over the next two years to nearly double its current size, which covers almost 60 cities at present.

PGCIL marked a stellar debut on the exchanges when it got listed on October 5 this year. The shares closed at Rs 100.65, a premium of 94 per cent to its issue price of Rs 52 on listing day. It climbed to Rs 167.45 on November 19. It closed at Rs 136.95 on Tuesday.

More Stories on : Entertainment & Leisure | Diversification | Power | Zee Telefilms Ltd

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