RCom to exit DTH after merging with SUN Direct

[shawl_who]

Reliance Digital TV, the fully-owned subsidiary of Reliance Communications that runs its direct-to-home (DTH) operations, will merge with Sun Direct to become India's second largest DTH company.

Under the deal, to be announced in a few days, Reliance Communications (RCom) will have 26 per cent stake in the merged entity. The merged company would also take over about Rs 1,500 crore of debt from Reliance's DTH operations. As of June 30, RCom's total debt stood at Rs 38,400 crore.

As part of the deal, Sun Direct will later go for an initial public offering. Reliance would then exit the merged company. According to sources close to the deal, RCom has valued the 26 per cent stake at around Rs 1,500 crore.

When contacted, an RCom spokesperson declined to comment. Sun Group did not respond to queries.

The deal would help the Anil Ambani-led Reliance Group reduce RCom's debt by Rs 3,000 crore. After the deal, management control would shift to the Marans, who own Sun Group.

Reliance DTH has a gross subscriber base of 4.1 million. It runs 260 channels on high-density format. Sun Direct has a subscriber base of about 8.5 million.

Dish TV is the largest company in this segment, with a gross subscriber base of 15 million. Other major players include Tata Sky (about 11.5 million subscribers), Airtel and Videocon D2H. The country's total DTH subscriber base rose from 28.7 million in December 2011 to 32.4 million in December 2012, according to analyst reports.

The deal is vital for Sun Direct, which has strong presence in the south, but not in the north and west, where Reliance has a large subscriber base. It also marks the beginning of consolidation in the DTH business, now facing tough competition from digital cable TV operators, especially after the government mandated subscribers and multiple system operators to shift from analogue to digital technology.

The deal would help RCom restructure, get out of its non-core businesses and use the proceeds to reduce debt. The company is expected to sell majority stake in Reliance Globalcomm, which controls its submarine cable assets worth Rs 6,000-7,000 crore.

RCom has signed long-term agreements with Mukesh Ambani-controlled Reliance Jio Infocomm. According to the deal, Reliance Jio would pay RCom Rs 12,000 crore to use its tower infrastructure.

Sun Direct, an 80:20 joint venture between the Maran family and Malaysia's Astro Group, specialises in catering to regional tastes, through MPEG-4 technology. After its launch in Tamil Nadu in December 2007, it expanded to other southern states, hitting the one-million-subscriber mark in less than 200 days. In September 2008, it rolled out pan-Indian operations.

Due diligence for the deal was done by PricewaterhouseCoopers.

In the recent past, DTH player Tata Sky sold five per cent stake to India Opportunities Fund for $49.9 million. There was speculation Airtel DTH was in talks with private equity funds such as KKR and Bain Capital to sell minority stake.

It was also reported Apollo Global Management could sell its 11 per cent stake in Dish TV.

RCom to exit DTH after merging subsidiary with Sun Direct | Business Standard

 

[me_saket]

So many thread for same merging topics

4

 

[Bishnu15]

Atleast some positive news about merging. People those who were against me I am so happy now. Let the merging happen. Better late than never. I want more Bengali Channels on SUN DIRECT.

 

[kiranrs]

Sun direct will buy Reliance Digital TV service.

Reliance Digital TV, the fully-owned subsidiary of Reliance Communications that runs its direct-to- home (DTH) operations, is close to selling over 80 per cent stake to Sun TV, controlled by Kalanithi Maran, in a deal valued at around Rs 2,500 crore. Under the agreement, which is being prepared to be signed within a few days, Reliance will get a one-time cash payment in return for infrastructure and assets of Reliance DTH, while Sun TV will get full management control over the company. The due diligence for the deal has already been completed.

When contacted, an RCom spokesperson declined to comment on the issue. Sun Group Chief Financial Officer S L Narayanan said: “We have also heard these from time to time; we choose not to comment, as much of what is being reported could well be unsubstantiated and misleading.”

Analysts say, this could be part of RCom’s restructuring exercise aimed at getting out of all its non-core businesses; the cash it gets from the deal could be used to to service debt. The company is also expected to sell a majority stake in Reliance Globalcomm, which controls its submarine cable assets, worth Rs 6,000-7,000 crore.

RCom had debt of Rs 38,864 crore till it pre-paid, only a few days earlier, two external commercial borrowings of $500 million each. It has also undertaken long-term agreements with Mukesh Ambani-controlled Reliance Jio Infocomm for use of its tower infrastructure. Under these, RCom will get a rental income of Rs 12,000 crore over a period.

As on March 31, Reliance DTH had 4.6 million customers and ran 260 channels on high-density format. Sun TV, on the other hand, has a subscriber base of about 8.5 million. After the deal, the combined entity, with a subscriber base of 13.1 million, will be a force to reckon with. The largest player in this space at present is Dish TV, which had a net subscriber base of 10.7 million as of March 2013. The other key players include Tata Sky, Airtel (8.1 million subscribers) and Videocon D2H.

The country’s total DTH subscriber base rose from around 28.7 million in December 2011 to 32.4 million as at the end of December 2012, according to analyst reports. Sun Direct, an 80:20 joint venture between the Maran family and Malaysia’s Astro Group, specialises in catering to the regional taste through the MPEG-4 technology. After its launch in Tamil Nadu in December 2007, Sun initially expanded in other southern states and achieved the one-million subscriber mark in less than 200 days. The company then rolled out its pan-Indian operations in September 2008.

Among other DTH players that have sold stake in recent past, mainly to private equity funds, is Tata Sky. It sold a five per cent stake to India Opportuntities Fund for $49.9 million. There also was a buzz that Airtel DTH was in talks with major PE funds like KKR and Bain Capital to sell a minority stake. Besides, there were reports that Apollo Global Management could sell its 11 per cent stake in Dish TV.

 

[Er. Dhananjay]

RE: Sun direct will buy Reliance Digital TV service.

might repost

 

[Anmol]

RE: Sun direct will buy Reliance Digital TV service.

Many threads running for same toppic