RIL’s Cable Bet Not An Immediate Threat To DTH, Says Dish TV’s Venkateish

Mukesh Ambani-led Reliance Industries Ltd.'s Rs 5,200-crore entry into India's cable industry will not be an “immediate catastrophe” for broadband and direct-to-home TV services players, according to an industry veteran.

It will take three to five years for an impact to be visible, said RC Venkateish, former head of India's largest DTH company Dish TV India Ltd. “In the immediate future, I do not see any impact on DTH because the first focus of Reliance will be to acquire these homes through the access they have got from the cable acquisitions and then look to upgrade those lines to fibre.”

But in three-five years, he told BloombergQuint in an interview, there would be some impact. That's because, he said, it's a much better cable and will allow for two-way interactivity which is a bit of a challenge for DTH services providers.

Reliance Industries announced acquisition of controlling stake in two of India's largest cable and wired internet services providers Den Networks Ltd. and Hathway Cable and Datacom Ltd., partly consolidating the fragmented industry. It complements Ambani's plan to launch JioGigaFiber—a fibre broadband network targeted at homes and businesses across 1,100 cities. The service will come with routers and set-top boxes for television and is expected to fuel competition in cable TV and DTH services.

The only cities that could be ripe for a conversion are Delhi and Mumbai, according to Venkateish. Even then, changing cable connections is a far more tedious job for a consumer than changing a mobile SIM card, he pointed out, referring to the churn in India's telecom market driven by Ambani's Reliance Jio Infocomm Ltd.

The deal is the best thing that could happen to Hathway and Den, IDFC Securities said in a note, as it addresses leverage, capex and competition issues. Dish operators are likely to be vulnerable and may see pressure on their average revenue per user, said another note by Bank of America Merrill Lynch.

Venkateish, however, said Reliance Industries will be in a good position to hike its prices, which will increase the average revenue per user for the entire industry.

It won't spark a price war as seen in the telecom industry, he said. “This will be more of a bundled offering where you have bandwidth, TV, voice bundled together in a monthly service, while DTH is only a content-delivery service.”