RCOM may buy Digicable in cashless deal

RELIANCE Communications(RCOM) is likely to acquire privately-held cable television company Digicable in a cashless deal, an investment banker familiar with developments told ET.
    The Anil Dhirubhai Ambani Group (ADAG) company will spin off its direct-to-home (DTH) television service called Big TV into a special purpose vehicle in which Digicable will also be housed, the banker said.
    RCOM will hold 60% in the special purpose vehicle, while Ashmore, a private equity fund, Jagjit Singh Kohli, the managing director and chief executive of Digicable and Yogesh Shah the joint MD will own the remaining stake, the banker said. Mr Kohli, earlier, was heading Wire and Wireless India, an Essel group digital cable distribution company, that was demerged from Zee Telefilms in 2006. Reliance Big TV, that has recently seen a plateau in subscriber additions, will get access to a ground digital cable distribution network to compliment its satellite distribution.
    Digicable has also applied for a licence to distribute cable TV via a technology called Headend-in-the-Sky, or HITS, which will prove beneficial to Big TV.
    RCOM already emits signal from a satellite which can be collected by a large dish, or the headend. The signal can then be decrypted at low-cost cable stations and distributed to individual houses. It also gives Big TV an edge over numerous DTH operators that have mushroomed over the past couple of years. Entry of Bharti Airtel and Sun TV over incumbents Tata
Sky and Dish TV has intensified competition in the sector. Companies are currently subsidising hardware costs of around Rs 2,000 per customer to get subscriptions. Distributing through land cable will eliminate individual dish costs, making it a cheaper option for consumers and the operator, said an analyst requesting anonymity. Many societies are also restricting residents from putting individual dishes on buildings in metros like Mumbai. The cable distribution business can help overcome that issue and reach more high-paying subscribers, the analyst, who tracks media at a domestic brokerage said.