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With Eyes on Hathway, RJio Redraws Battle Lines With Airtel

Reliance Jio's entry into India's home broadband market may get a welcome boost if it can acquire a stake in Hathway Cable and Datacom.

Media reports say RJio has been in talks with the Raheja Group about acquiring Hathway, one of the largest cable broadband providers in the country. The Raheja Group owns 43.4% share in Hathway.

Having recently announced the launch of a home broadband service it calls GigaFiber, Reliance Jio has encountered resistance from local cable operators as it tries to get the ball rolling. That has forced it to look for partners that could help to ease progress.

Hathway, which has 7.2 million digital cable customers and more than 770,000 broadband subscribers in 16 cities, could be a good target for Reliance Industries, the cash-rich parent of RJio.

Reliance Industries Ltd. (RIL) had previously tried to negotiate a buyout deal with another cable service provider called DEN Networks. But that deal ultimately fell through. The latest reports suggest an RJio takeover could value Hathway at around 25 billion Indian rupees ($330 million).

A sale to RJio could look attractive to Hathway, which might otherwise struggle to compete against a player backed by a powerhouse like Reliance Industries. For RJio, an acquisition would help it overcome some of the last-mile issues it has faced in areas where Hathway is operating.

RJio vs. Airtel again
With the launch of GigaFiber, RJio has opened another front in its tussle with Bharti Airtel, which was until recently the largest service provider in the country.

RJio now threatens to disrupt the home broadband space in much the same way it upset the mobile industry. In that market, Bharti Airtel’s consolidated net profit declined by 71% in the recent fiscal year, to INR11 billion ($149 million), with consolidated revenues down 12%, to INR836.9 billion ($11.3 million).

For more fixed broadband market coverage and insights, check out our dedicated Broadband content channel here on Light Reading.

In the fixed broadband market that RJio is targeting, Bharti Airtel Ltd. (Mumbai: BHARTIARTL) is currently the second-largest player, with a 10% share, with state-owned Bharat Sanchar Nigam Ltd. (BSNL) still serving more than one half of customers. Hathway's share is just 4%. But that could soon change if RJio took control of the business.

Other regional players might also be up for sale, including not only DEN Networks but also GTPL Hathway, Act Fibernet and Spectra. RJio could be attracted to these companies because of their infrastructure and customer numbers in specific areas. GTPL Hathway, for instance, is well established in the state of Gujarat and western part of the country, while ACT Fibernet is a prominent player in southern India. Acquiring any of these firms would help RJio to expand more easily in these markets.

— Gagandeep Kaur, contributing editor, special to Light Reading

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