RJio to take acquisition route for speedy broadband roll out

Rashmi Pratap Mumbai | Updated on October 16, 2018

Reliance Jio is once again scouting for acquisitions, this time in the cable space, as it plans to build scale in GigaFiber business. This will offer ultra high speed broadband at 1 GB per second for watching content, video conferencing and other services.

Fibre-based broadband will be the next big game changer because wireline is a better technology for providing high quality broadband service due to dedicated physical connectivity. But Jio, being a late entrant, does not have access to last mile connectivity to take its GigaFiber to customer’s home. The next option for Jio – acquire those with last mile link to cut down the time-to-market.

“Reliance Jio has laid down a lot of fibre and is extending its last mile connectivity to provide services at higher speeds. But a shorter route to speed up the journey is to look at midsize companies Hathway and Den, which have evolved from being cable to broadband provider and have the last mile connectivity,” Jayanth Kolla, founder and partner at tech research firm Convergence Catalyst told BusinessLine.

While Hathway has passed over 5.5 million homes, the number for Den Networks, another multiple system operator, is just under a million. Home pass refers to the premises an operator can connect but may or may not have actually done so.

Hathway, promoted by the Rajan Raheja Group and a strong player in central and western regions, needs funds to expand as well as retire a debt of over ₹1,700 crore and Den has been making losses for nearly four years now. It reported a loss of ₹28 crore in the June quarter but is a dominant MSO in the northern region. “It will be a good strategy for them to merge with Reliance and get a good valuation instead of bleeding in business. With this, Reliance will also get access to a ready consumer base,” Kolla added.

Hemant Joshi, technology, media and telecom leader at Deloitte India, said securing the right of way for laying fibre remains a big challenge. “Though guidelines are given, it requires many local approvals as roads have to be dug up and they are under different wards and municipalities. It is very time consuming,” he said.

But if a player, like an MSO, has already laid fibre, then it is readily available for use. “If you want to give 5G services, then also you need fibre. It is inevitable as backbone,” he added.

Home pass capex per subscriber is around ₹3,000 and combined with last mile capex, wi-fi modem and other cost, the total per subscriber cost is over ₹8,000, with a payback period of close to three years.

“Laying wireline infrastructure is a costly and time consuming proposition and that’s why when India had to grow rapidly, wireless was the choice. But wireless has issues around bandwidth, so wireline will always be better technology for high quality broadband,” Kolla added.

While the three players have not announced any plans to join hands, Hathway MD Rajan Gupta has said that Jio’s entry has created headwinds for the company’s broadband business. In the given scenario, a deal seems almost inevitable.

Published on October 16, 2018

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor