Reliance Digital TV close to selling over 80% stake to Sun TV
Reliance Digital TV, a fully owned subsidiary of Reliance Communications, which runs the direct to home (DTH) operations is close to sealing a deal to sell off over 80 per of the company’s
stake to Maran controlled Sun TV. The deal is valued at around Rs 2,500 crore.
Under the agreement which is being drawn up
to be signed within a few days Reliance will get
a one time cash payment in return for which Sun
TV will get the infrastructure and assets of
Reliance DTH as well as full management control over the company. The due diligence for the deal
has already been completed. A RCom spokesperson when contacted declined
to comment on the issue. SL Narayanan, Group
CFO, Sun Group said "We have also heard these
from time to time; we choose not to comment as
much of what is being reported may well be
unsubstantiated and misleading." Analysts say once the deal gets through the cash
will be used by RCom to pay its debt as part of
their restructuring exercise which is aimed at
getting out of all its non core businesses. The
company is also expected to sell off a majority
stake in Reliance Globalcomm which controls its submarine cable assets for Rs 6,000 to Rs 7,000
crore. Just a few days ago the company prepaid
US $ 500 of two external commercial borrowings.
RCom has a debt of over Rs 38, 864 before the
ECB payout. It has also undertalen long term
agreements with Reliance Jio under which it will get a rental income of over Rs 12,000 crore from
Reliance Jio throughout the life for usage of its
tower infrastructure , As on 31st March 2013 Reliance DTH had 4.6
million customers and ran over 260 channels on
high density quality format. Sun TV on the other
hand has a subscriber base of more than 8.5
million. Once the deal is done the combined
entity with a subscriber base of 13. 1 million will be a key force to reckon with. The largest player
according in this space is Dish TV which had a
net subscriber base of 10. 7 million on March
2013. The other key players include Tata Sky ,
Airtel ( with 8.1 million subscribers) , Videocon
amongst others. Currently the DTH subscriber base has gone up from around 28.7 million till
December 2011 to 32.4 million in the end of
December 2012 according to analyst reports. Sun Direct specializes in catering to the regional
tastes, especially those in the South of India,
through MPEG-4 technology. Sun Direct is a 80:20
joint venture between the Maran family and the
Astro Group of Malaysia. The Sun DTH service was
initially launched in Tamil Nadu in Dec 2007 followed by the services being launched in the
neighboring southern states, after achieving 1
million subscribers in less than 200 days the pan
India roll out began in Sept 2008.
Reliance Digital TV, a fully owned subsidiary of Reliance Communications, which runs the direct to home (DTH) operations is close to sealing a deal to sell off over 80 per of the company’s
stake to Maran controlled Sun TV. The deal is valued at around Rs 2,500 crore.
Under the agreement which is being drawn up
to be signed within a few days Reliance will get
a one time cash payment in return for which Sun
TV will get the infrastructure and assets of
Reliance DTH as well as full management control over the company. The due diligence for the deal
has already been completed. A RCom spokesperson when contacted declined
to comment on the issue. SL Narayanan, Group
CFO, Sun Group said "We have also heard these
from time to time; we choose not to comment as
much of what is being reported may well be
unsubstantiated and misleading." Analysts say once the deal gets through the cash
will be used by RCom to pay its debt as part of
their restructuring exercise which is aimed at
getting out of all its non core businesses. The
company is also expected to sell off a majority
stake in Reliance Globalcomm which controls its submarine cable assets for Rs 6,000 to Rs 7,000
crore. Just a few days ago the company prepaid
US $ 500 of two external commercial borrowings.
RCom has a debt of over Rs 38, 864 before the
ECB payout. It has also undertalen long term
agreements with Reliance Jio under which it will get a rental income of over Rs 12,000 crore from
Reliance Jio throughout the life for usage of its
tower infrastructure , As on 31st March 2013 Reliance DTH had 4.6
million customers and ran over 260 channels on
high density quality format. Sun TV on the other
hand has a subscriber base of more than 8.5
million. Once the deal is done the combined
entity with a subscriber base of 13. 1 million will be a key force to reckon with. The largest player
according in this space is Dish TV which had a
net subscriber base of 10. 7 million on March
2013. The other key players include Tata Sky ,
Airtel ( with 8.1 million subscribers) , Videocon
amongst others. Currently the DTH subscriber base has gone up from around 28.7 million till
December 2011 to 32.4 million in the end of
December 2012 according to analyst reports. Sun Direct specializes in catering to the regional
tastes, especially those in the South of India,
through MPEG-4 technology. Sun Direct is a 80:20
joint venture between the Maran family and the
Astro Group of Malaysia. The Sun DTH service was
initially launched in Tamil Nadu in Dec 2007 followed by the services being launched in the
neighboring southern states, after achieving 1
million subscribers in less than 200 days the pan
India roll out began in Sept 2008.
