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Tag: WWIL

  • Zee News, WWIL to list by February 2007; Dish TV likely by March

    Zee News, WWIL to list by February 2007; Dish TV likely by March

    MUMBAI: Zee Telefilms Ltd (ZTL) expects its two demerged entities, Wire & Wireless India Ltd (WWIL) and Zee News Ltd, to be listed by February 2007. This follows the approval of the demerger scheme by the Bombay High Court.

    The listing of Dish TV, Zee’s demerged direct-to-home (DTH) business, is likely to be by March. The scheme relating to the de-merger of DTH has not yet been listed for hearing at the Bombay Stock Exchange or in the Delhi Stock Exchange and will take some time. The listing date will be known only after the court gives the nod.

    “WWIL and Zee News Ltd should list by February 2007. We expect to list Dish TV by March,” says Essel Group CEO, corporate strategy and finance, Rajiv Garg.

    ZTL today announced the approval of its demerger scheme by the Bombay High Court. This paves the way for setting the record date for the demerger of the cable distribution and news and regional broadcasting businesses of Zee into WWIL and ZNL respectively.

    The Record Date is likely to fall in the latter half of December.

    The shareholders of Zee as on the Record Date shall be allotted shares in WWIL and Zee News. The respective companies would then be applying for listing of such shares to the BSE, NSE and CSE, in compliance with SEBI guidelines.

    Zee expects this process to be completed by February 2007.

  • Liberty actively exploring India entry options

    Liberty actively exploring India entry options

    MUMBAI: If everything falls in place, India could well be the next operational port of call in Asia after Japan for the John Malone-controlled Liberty Media.

    Says Shane O’Neill, SVP, chief strategy officer and board member, Liberty Global, “Over the last six years, we haven’t looked too closely at this market. But now I want to get a more informed view.” When queried over the credible buzz that had surfaced at one time that Liberty might buy in to the Hinduja Group’s InCableNet, but that the deal fell through over valuations, O’Neill dismissed it as market speculation.

    Asked as to what Liberty’s entry route into the Indian market would be, O’Neill said those calls had still to be taken but it was “highly unlikely we would enter without (an Indian) partner”.

    “Currently India is the best opportunity in Asia, even more than China. We have the appetite to invest in these markets and are not worried about the complexities that exist,” O’Neill avers.
    There are four key issues that Liberty has identified as being critical to its India rollout plans:

    1. Figure out a partnership strategy;

    2. Garner a complete understanding of the regulatory environment in the country.

    3. Understand the government’s attitude to foreign investment in the sector;

    4. Come up to speed on the ground situation.

    O’Neill also raised the point about a the need for a level playing field as regards investment opportunities. The same set of rules should apply to telcos / cable and satellite companies, he said.

    As regards the cable scenario, his view is that FDI and channel pricing are the two issues that really need to be looked into. On pricing, O’Neill opines that government intervention should only be as regards the basic service; for everything else it should be left to the market.

    Asked about the impact of CAS, he said that the rollout of addressability would certainly incentivise the likes of Liberty to enter India.

    O’Neill did stress however, that Liberty was not going to rush into anything but would not be conservative in its thinking either. According to him, the media major’s mantra was “Informed aggression, not instinctual aggression.”

    Subhash Chandra has stated that WWIL (erstwhile SitiCable) will be pumping in $ 200 million over the next two years as part of an aggressive growth strategy that is underpinned by the switchover to digital delivery. Could Liberty facilitate that effort? Time should tell.

  • MSOs get CAS authorisation letters

    MSOs get CAS authorisation letters

    MUMBAI: The government’s CAS rollout plan continues apace. All the major MSOs today received “CAS authorisations” from the sector regulator, which clears the way for the public awareness campaigns to kick on the stipulated date of 15 October.

    According to IndusInd Media & Communications executive director Ashok Mansukhani, the letters issued by the Telecom Regulatory Authority of India (Trai) are dated 30 September and authorise an MSO to operate in the cities of Mumbai, Delhi, Kolkata and Chennai “in the areas notified under Section 4(a) of the Cable Act 1995 as per 11(2) of the cable rules 1992 as amended in 2006.”

    Says Mansukhani, “These letters clear the way for MSOs to seek authorisation from broadcasters to enter into revenue share agreements with broadcasters and operators in terms of the August 24 interconnect regulation and the August 31 tariff order issued by Trai. It also clears the way for us kick off the CAS awareness campaign by the mandated date of 15 October.”

    Executives in the Zee Group promoted WWIL (earlier Siticable) also confirmed receiving the CAS authorisation letters. 

    It was on 18 September that Trai issued a directive that the date for starting public awareness campaign by permitted MSOs in CAS notified areas will be not later than 15 October. This directive was further to its earlier order specifying standards of quality of service to be observed by the MSOs / cable operators in CAS notified areas.

    The CAS awareness campaign will last for a period of 30 days. The general directive also provides for filing of a compliance report immediately after the start as well as the end of the campaign.

    Trai had issued a regulation on 23 August specifying standards of quality of service to be observed by the MSOs/ Cable Operators in CAS notified areas of Chennai, Mumbai, Delhi and Kolkata. This regulation had stated that multi system operators permitted to provide cable services in CAS notified areas would be required to conduct a public awareness campaign from a date to be specified by Trai.

  • Digital cable heart of Zee’s WWIL story

    Zee Telefilms chairman Subhash Chandra is on a roll. The resurgence of flagship Hindi entertainment channel Zee TV has come after years of slippage since Kaun Banega Crorepati catapulted Star plus into leadership position.

    But this is not just about Zee TV‘s prime time assault on Star Plus; it is also about how Chandra is preparing for the big fight against Rupert Murdoch in the direct-to-home (DTH) space which will determine who will dominate the broadcasting business.

    Laying the preparatory ground, Chandra has streamlined his media empire to give it the right focus, resources and value. His announcement on 29 March: Zee Telefilms will be de-merged into four separate entities. While cable business will come under Wire and Wireless India Ltd (WWIL), Dish TV will handle the DTH operations. News and regional channels are being consolidated in Zee News Ltd. Under the umbrella of Zee Telefilms will be the newly launched Zee Sports.

    The “sum total of the parts” concept ignited the scrip which, once hovering around Rs 130-150 in mid-2005, has breached the 200-mark and closed today at Rs 227.

    In the first of a four-part series, Indiantelevision.com takes an in-depth look into the de-merged cable business of Zee Telefilms.

    Subhash Chandra sees a golden opportunity in the cable TV business becoming a crown jewel in his media empire. His new mantra: digitalisation, broadband and Voice over Internet Protocol (VoIP).

    Media czar Subhash Chandra

    Having built the largest network in the country with a base of 6.8 million subscribers, Chandra has set upon himself the task of refashioning the business model to discover hidden value. His first step: to hive off the cable assets into a separate company, Wire and Wireless India Ltd (WWIL), as it would allow for better allocation of capital and management resources.

    Jagjit Singh Kohli, a doyen in the industry, is put at the steering wheel to chalk out a comprehensive business plan. “We have identified cable distribution as a thrust area. We are building a separate team under Kohli to work out the full plan. Digital cable will help push up the ARPUs (average revenue per user). We can also share the infrastructure with telecom companies for voice services,” Chandra told analysts at a meeting after announcing his de-merger plans.

    Chandra is weary of the fact that multi-system operators (MSOs) have been incurring historical losses in an unorganised sector dominated by last mile operators (LMOs) who terribly under-report subscriber numbers. For the fiscal ended March 2006, Zee‘s cable business barely managed to post an operating profit of Rs 17 million on a revenue of Rs 1.5 billion. Lack of addressability in the industry has, in fact, dragged down valuations of analogue cable networks.

    Making digital cable the heart of WWIL‘s growth strategy, Chandra has earmarked an investment of Rs 5 billion over three years to charge up the business. “The minimum we will be pumping in this fiscal is Rs 600 million. But we are working on two models and if we are able to push digitalisation in a big way, we will actually be investing Rs 1.3 billion this year,” says Essel Group CEO of corporate strategy and finance Rajiv Garg.

    After Delhi, a digital headend is being set up in Mumbai, a lucrative market where WWIL currently has a small presence. Kolkata, Bangalore and Hyderabad are some other cities which will also inhabit the digital map.

    That does not mean that analogue expansion will be abandoned. WWIL is best poised to take up this role as, with a huge pile up of Zee channels, there are broadcasting interests to protect in an environment where cable bandwidth is choked. Siticable (earlier name of Zee‘s cable company), in fact, swung into action last year to snap up RPG-promoted Indian Cable Net, the biggest MSO in Kolkata. Spoiling Kalanithi Maran‘s SCV plans, the acquisition established Siticable as the leading MSO with a market share of over 60 per cent.

    Siticable has also taken on lease two prominent cable networks of Bangalore, Ice Network and Atria Network. In Hyderabad talks with Maran to tie up against Hathway Cable & Datacom were initiated but failed. Expansion through affiliation schemes to existing cable networks is also much on the agenda.

    By aggressively pursuing such plans, Chandra feels his cable business is sure to find a pot of gold. He has put WWIL‘s valuation in the region of $800-900 million (Rs 36-40.5 billion).

    Just over six years back, Chandra had bought out News Corp‘s 50 per cent stake of Siticable at a valuation of Rs 15 billion. So how does he arrive at such a steep rise in valuation now?

    The calculation runs somewhat like this: Siticable gets paid for a million homes which, according to Chandra, can attract a valuation of $500 (Rs 22,500) per subscriber. For the balance 5.8 million subscribers (for which Siticable is not paid), he puts a value of $50 (Rs 2,250) per subscriber, taking the total worth of the network to around $800 million.

    Since the buyout in 1999, Chandra believes a turnaround in valuations is possible for two basic reasons: conditional access system (CAS), which will ensure rollout of digital cable TV in the country; and potential of cable to get into the arena of triple play convergence – voice, data and video.
     

    “We are bullish about our cable business. We can attract investors in our distribution businesses in cable and direct-to-home (DTH),” Chandra had told Indiantelevision.com soon after announcing de-merger of Zee Telefilms into four individual entities.

    On annual revenue of Rs 1.5 billion, investors have to really bet their money on future earnings of the cable industry. The ARPU is around $3.5 a month, meaning a massive scale up has to take place.

    A question that analysts ask is: how does he put a value of $50 for the 5.8 million subscribers which WWIL is not paid for?

    A research firm has put the enterprise value (EV) of WWIL at $670 million (Rs 30.15 billion). This is based on EV per subscriber of $100 (with 6.7 million subscribers).

    Traditional cable valuations have been high but not at the level Chandra is looking at. Hathway was valued at $225 million and Star took a 26 per cent stake for $75 million, paying for a presence in distribution after exiting from Siticable and hype on IP-driven content. Even after adding size to the network, digital cable to a small extent and broadband growth, analysts put Hathway‘s current valuation at $400-500 million. Hinduja-owned Incablenet has also got on Intel and Kudelski to invest at huge valuations, but these have been small stakes in the company.

    What has changed this time, though, is CAS. This changes the business model of MSOs as it gives them direct control of the last mile subscribers.

    For getting an investor at the valuation that Chandra wants, WWIL will have to get in digital cable. Besides, it needs to have more control over the LMOs. The pot of gold, after all, resides in the last-mile system. CAS, or addressability, will instantly ignite valuations when it comes, but at the moment it looks some distance away.

    Chandra‘s corporate restructuring, however, has come at the right time. Telecom majors like Reliance Infocomm are feeling the need of getting access to the last mile through the chain of cable operators for rollout of IPTV. And, if CAS is mandated, international players like Liberty and Comcast will be keen to invest into the existing MSOs as an entry strategy. Private equity investors will also find cable worth putting their bets on.

    WWIL CEO J S Kohli

    Some investment bankers feel Hathway is handicapped in a way as, with Star as a 26 per cent partner, the MSO will find it difficult to woo in strategic investors. Even getting in private equity participation will require the approval of Star. Incablenet, on the other hand, may find reason to opt only for a strategic investor as it does not have any broadcast ownership.

    Chandra can find a business case in expanding analogue business, particularly in territories where it can rake in carriage fees from broadcasters, with the strategy of putting digital later on the platform. In this arena, WWIL can be more aggressive than rival networks Incablenet and Hathway and may not even face competition from them. For Incablenet, the focus will be on converting its existing network into digital cable. As for Hathway, future expansion strategies will depend on how much Star is prepared to invest to support these plans. With Tata Sky, Star also has an interest in promoting its DTH business.

    The tough question is: where and how can WWIL find the space to expand its footprint?

    In the southern region, Tamil Nadu and Kerala will be impossibly tough territories to crack with Maran‘s SCV and Rajan Raheja‘s Asianet Satellite Communications Ltd. having a dominating presence. As for Andhra Pradesh, WWIL will have to regain lost ground in Hyderabad where it has not been getting signals from Star and Sony-Discovery bouquets after Hathway was appointed as distributor of these channels. Karnataka is a different story as WWIL has a sizeable presence in Bangalore, though it is yet to roll out digital services.

    “We are plotting plans to revive our network in Andhra Pradesh. We will soon have a strategy in place,” says a Siticable joint venture partner in Hyderabad.

    In Madhya Pradesh, the main markets of Bhopal and Indore are dominated by Bhaskar Multi Net Ltd, promoted by print media giant Bhaskar group. Rajasthan Patrika owners have also diversified into cable. Though Kolkata is under the grip of WWIL, it will be difficult to extend the footprint in the eastern region. Orissa is dominated by Ortel and the other markets may not be attractive.

    WWIL has scope to expand in the smaller towns of western and northern India where it already has a well spread out presence. “It is nice to talk of expansion, but the market reality is different. In Karnataka there is scope to expand but ARPUs are low. It is also difficult to get carriage fees in the southern states where there is no appetite for Hindi content. WWIL can spread its wings in the northern and western regions but has to be careful if it wants to step into non paying and unstable markets,” says a trade analyst.

    The main challenge is to gain market share in Mumbai and Delhi. “WWIL will have to start a war in Mumbai and Delhi by dropping feeder rates to poach distributors and local operators. These will be two big digital markets. If WWIL goes on the offensive, we may have a land grab like situation,” says the analyst.

    Some analysts feel WWIL will have a distinct advantage in case of a fast digital rollout growth. “They have the widest presence and have the largest cable network in the country. They can take advantage of the digital environment and launch a headend-in-the-sky (HITS) platform,” says a market analyst.

    What Chandra needs is to pump in money. As the ideal debt-equity ratio for WWIL is 1:1, getting an investor in would help though it is not imperative. “The net worth of the company currently is not that strong to support that size od debt. We are, after all, planing to invest Rs 5 billion to expand the business,” says Garg.

    Trust the maverick Chandra to make the right move at the opportune moment. Unlike in 2000, Chandra has one advantage in roping in an investor this time. With WWIL getting listed, the piece of cable business in his media empire can be an attractive buy.

  • ‘Zee Telefilms to see ad revenue growth of 12 – 15% in FY07’ : Rajiv Garg – Essel Group CEO of corporate strategy and finance

    ‘Zee Telefilms to see ad revenue growth of 12 – 15% in FY07’ : Rajiv Garg – Essel Group CEO of corporate strategy and finance

    Cable and direct-to-home (DTH) is where Zee Telefilms Ltd (ZTL) chairman Subhash Chandra is planning to put the accelerator on. Wire and Wireless India Ltd (WWIL), the cable outfit, will enjoy an investment of Rs 5 billion to lay out a digital platform, gear up for triple play and expand in value-added services. And to fight Tata Sky in the DTH business, he will pump in Rs 2.5 billion over two years.

    Zee News Ltd. (ZNL), which will have news and regional channels under its umbrella, is looking at a turnover of Rs 2.5 billion this fiscal. The listing of these demerged companies is expected to be in September-October.

    In an interview with Indiantelevision.com’s Sibabrata Das, Essel Group CEO of corporate strategy and finance Rajiv Garg talks about the reasons for the demerger and the expansion plans of these separate entities.

    Why did Zee Telefilms Ltd (ZTL) decide to demerge its businesses into separate entities?
    The driving argument for demerger was that all these businesses had become big in themselves. Huddled together under Zee, they were not given the right strategic focus as the company was very broadcast-oriented. In cable, for instance, we felt that we were not doing justice to its growth potential. Also, in certain lines of activity the government regulations were impinging upon the growth prospects of the company. The idea was to see if we could create that focus and comply with the government guidelines. With so many technological advances taking place, we felt it was the right environment to carry this out. We decided to create independent governing structures and managements, delink cable from broadcasting, and put together certain news-bearing channels into an independent entity.

    Why was the direct-to-home (DTH) business housed in complex structures which did not allow for tax efficiencies?
    The idea was to provide specialist services in specific entities. As the competencies lay in them, the DTH business was spread across three outfits. Integrated Subscriber Management Systems Ltd, for instance, has an expertise in such areas like subscriber billing. Siticable has been negotiating content from the time the cable industry began in India. New Era Entertainment formed the marketing and ad sales arm. The aim was to create a revenue-sharing arrangement with ASC Enterprises Ltd (Ascel), the DTH license holder. When we did this structuring, there was no service tax applicable to the industry which was introduced later. We did not anticipate taxation developments to happen so quickly and cause financial inefficiencies. Besides, demerger will provide clarity of structure and add value to shareholders.

    Since regulation allows for a broadcast cap of 20 per cent, why didn’t ZTL hold stake in the DTH business?
    It would have happened in due course. We were in no hurry as we wanted to present the DTH platform as broadcast neutral. The internal intention was to acquire equity once the key relationships came in.

    What does the demerger process in the DTH business involve?
    In the first stage, Siticable will hive off its cable TV business into Wire and Wireless India Ltd (WWIL). The residual Siticable and its wholly owned subsidiary New Era Entertainment Network Ltd will then merge with Ascel, thus consolidating all the DTH operations under one company. Zee Telefilms shareholders will get 23 shares of Ascel for every 10 shares held.

    How did you arrive at this exchange ratio and why did you prescribe for a subsequent cancellation of shares?
    It is the independent valuer (Deloitte Haskin & Sells) who came up with this ratio. As for cancelling three of every four shares held in Ascel, this is to bring back the capital base to the pre-merger level. The paid-up equity of Ascel would have bloated to around Rs 1.66 billion after the merger, up from the base of Rs 411 million. This would have been too large an equity for a company of this size. So we wanted to compress the capital base. We could have given a predetermined base, but didn’t know the ratio the valuer would arrive at.
    ‘DTH revenues will touch Rs 8 billion in FY08 as subscribers rise to 3.15 million and ARPU to Rs 310‘

    Zee’s operating revenues from the DTH line of business was Rs 818 million in FY06 while losses stood at Rs 790 million. What is the investment plan and how do you see subscribers and average revenue per user (ARPU) size up over the next two years?
    The net expense for DTH operations so far is Rs 3.8 billion. We are planning to pump in a further Rs 2.5 billion over the next two years. But we are sitting on a dynamic model and if Tata Sky and us are aggressively competing, there is a possibility of the subsidy amount further increasing. It is a factor of what strategies we adopt to develop our subscriber base. By the end of FY06, we reached close to one million subscribers. We project a gross revenue of Rs 3.2 billion in FY07 on a subscriber base of 2.4 million and an ARPU of Rs 250 (up from Rs 190) mainly because of the launch of value-added services. And in FY08, we see ourselves growing to a revenue of Rs 8 billion as subscribers rise to 3.15 million and ARPU to Rs 310.

    When do you expect to sign up with Sony and how do you see content growing?
    We expect Sony to happen within a month. Gradually, the content kitty is filling up. We are also looking at creating new DTH channels. Our plan is to expand to 200 channels.

    Will transponder space be a limitation?
    We will have to find space. We may have NSS when Doordarshan’s DD Direct vacates the satellite to move to Insat 4B. We are also talking to Isro (Indian Space Research Organisation) to launch a dedicated satellite for us.

    Are your Korean set-top vendors planning to set up a manufacturing facility in India?
    I don’t think it is viable at this stage. The volumes are too small for us to ask our STB vendors to manufacture in India. When we scale up to five million (boxes a year), then it may be a feasible project.

    Which do you think will attract investors first, the DTH or cable company?
    Both have attractive growth paths. We are looking at a mix of debt and funding coming from strategic or private equity investors.

    Are you looking at a small dilution initially of up to say 26 per cent?
    It all depends on what is the offer. Yes, if you initially dilute a small stake you have the advantage of discovering value as the company grows. But we have a flexible approach and it all depends on how lucrative the proposal is.

    Have you started talking to investors?
    We have been approached by many, but nothing is imminent yet.
    Will WWIL infuse massive capital towards digitisation of cable and triple play?
    We know the cable business has a lot of undiscovered value and will be giving it a big push. WWIL has a business plan which would take in an investment of Rs 5 billion over three years to drive digitisation, broadband and triple play rollout. It is a classic example of how the focus has been lacking and we have not taken advantage of the technology advances. We are looking at a million digital cable subscribers in the first year as we bundle service and hardware together in some form of subsidy. We also plan to make the network available to telecom operators for voice. Valuation of the cable business can only go up as the industry is badly suppressed. Conditional access system (CAS), digitisation and triple play will liberate the industry and growth in revenues can be rapid.

    How much debt you will raise to fund the expansion?
    We are looking at a debt-equity ratio of 1:1. The net worth of the company currently is not that strong to support that size of debt. We are, after all, planning to pump in Rs 5 billion to expand the business.

    What was the need for restructuring Zee News again?
    The restructuring started a couple of years ago when the uplinking guidelines were changed. Since we had a substantial foreign holding in ZTL, broadcasting of news and news-bearing channels were placed on a separate footing. Gradually as a response we shifted news gathering and uplinking to a separate company, Zee News Ltd, which was in compliance with the guidelines.

    But in the last few months, we have been mutilating this model as we found that there is a lot of strategic gap or clarity between the thinking of the producer (Zee News), the distributor (Zee Telefilms) and the team that exploits the commercial rights (Zee Telefilms) to such channels. So we thought we would close the gap and put everything in an entirely separate entity. All strategic decisions should be taken in an integrated manner by one team – be it production, news gathering, programme slotting, distribution or commercial exploitation.

    So what were the strategic gaps?
    The differences sprung because there was a revenue sharing arrangement between the two, but I can’t give you the minute details. It is not a good idea tactically to unite even if both of them are part of the same family.

    Zee news and regional channels had a combined turnover of Rs 2 billion in FY06. Were regional channels brought under Zee News Ltd (ZNL) because they could add to the company’s topline growth?
    The main reason for this kind of arrangement is that they are news-bearing channels; the regional channels have a strong component of current affairs and news programming. One of the consequences of this combination, of course, can be fattening of the topline. We are projecting a revenue of Rs 2.5 billion in FY07 and Rs 2.9 billion in FY08.

    As part of the restructuring, 137 ZNL shares will fetch 100 shares in ZTL. But with the total foreign shareholding in ZTL at 54.69 per cent, how does ZNL fall within the regulatory cap of 26 per cent?
    ZTL chairman Subhash Chandra will be transferring his foreign holdings (22.77 per cent is foreign promoters holding in ZTL) to an investment company in India. Also, foreign institutional investors (FIIs) will be given preference shares to bring the cap under limit (FIIs hold 31.51 per cent in ZTL).

    When are you planning the launch of Tamil and Malayalam language channels? How much are the new southern channel launches consuming as investments?
    The two channels should see launch in the current fiscal and in FY08. Along with the Kannada launch, the total investments would be in the region of Rs 350 million.

    With the demerger, won’t the topline of core Zee Telefilms see an erosion?
    Even after physically transferring the topline out, there is enough of a mandate to register growth. We have the number two and three (Zee Cinema and Zee TV) channels in the country. If they continue to focus on the products they have, their growth path is mandated. The flagship channel, Zee TV, is seeing a surge in ratings and ad rates.

    For core ZTL (after demerged businesses), we expect an advertising revenue growth of 12-15 per cent in FY07. While international business will sustain its 10-12 per cent growth (adding of channels and gain from Middle East), domestic subscription will stay steady. Overall, the core ZTL (after demerged businesses) will see a growth of 10 per cent in the current financial year.

    Will the bottomline look healthy after hiving off the loss-making businesses?
    The pullout is of minor loss-making businesses. The impact will largely even out as Zee News and the regional channels were profit-making. Still, there will be some positive outcome.

    How will Zee Sports play out on ZTL’s bottomline, particularly after bagging at a whopping price of $219.15 rights to 25 offshore cricket matches over five years?
    Zee Sports is at a development stage and there will be investments made for the long term development of the channel. There is a particular sequence in which we have to pay and the outgo for the first year will be $5.04 million per match. That will give us reasonable time to drag on the investments and build the channel. Besides, we will be bidding for other major sports properties including the ICC World Cup which is coming up for grabs.
  • Chandra to pump in Rs 7.5 billion into WWIL, Dish

    Chandra to pump in Rs 7.5 billion into WWIL, Dish

    MUMBAI: Subhash Chandra has big investment plans for the two de-merged entities of Zee Telefilms Ltd (ZTL). Wire and Wireless (India) Ltd. and Dish TV, engaged in the cable TV and direct-to-home (DTH) businesses respectively, will together be pumping in Rs 7.5 billion to fund their expansion plans.

    WWIL will have an investment requirement of Rs 5 billion over the next three years to give a big push to digitisation of cable TV, broadband and voice services. The cable company also expects to rope in an investor. “WWIL has a business plan which would take in an investment of Rs 5 billion over three years. The strategic thrust will be on rollout of digital cable. We are also looking at triple play offerings. We have a network which can be made available to telecom operators for voice,” Essel Group chief executive officer of corporate strategy and finance Rajiv Garg tells indiantelevision.com.

    WWIL is looking at a debt-equity ratio of 1:1. “The net worth of the company currently is not that strong to support that sort of debt. We would like a 1:1 debt-equity ratio,” Garg says.

    Operating revenues from ZTL’s cable line of business stood at Rs 1.5 billion for the fiscal ended 31 March 2006 while net profit was at Rs 7 million.

    For Dish TV, the DTH outfit, there is a Rs 2.5 billion investmen plan over the next two years. The net expenses for DTH operations thus far is Rs 3.8 billion, says Garg. “We project a gross revenue of Rs 3.2 billion from our DTH business in FY07. We aim to have 2.4 million DTH subscribers in the fiscal while the average revenue per user (ARPU) should go up from Rs 190 to Rs 250 a month because of the launch of value-added services,” he adds.

    The operating revenues for the DTH business stood at Rs 818 million in FY06. On the back of subsidies and marketing expenses, the DTH operations incurred a loss of Rs 790 million during this period.

    The de-merged DTH and cable companies are likely to opt for an initial dilution of up to 26 per cent to investors. They are open to both private equity and strategic investors.

  • Hinduja TMT to de-merge media, IT/BPO biz

    Hinduja TMT to de-merge media, IT/BPO biz

    MUMBAI: Hinduja TMT Ltd. will de-merge the company’s IT/BPO and media businesses into separate entities. The board of directors of the company are meeting tomorrow to provide in principle approval for this.

    The media business is likely to be brought under a holding company, a source said. HTMT has been weighing several options while deciding on separating its IT from media business. One option is to have the cable TV and broadband business under one entity while keeping the content business separate. Another possiblity could be to have a common entity for the media businesses.

    “I have nothing to comment at this stage. The board is meeting tomorrow,” HTMT MD K Thiagarajan said.

    Last month, speaking to Indiantelevision.com, Thiagarajan had admitted that de-merger was very much in the plans. “It couldn’t be done in 2005-06 fiscal because of certain taxation issues. The programme is still alive and we hope to de-merge early this fiscal. A committee of directors are looking into the issue.”

    HTMT has subsidiary companies which are into cable TV distribution, a cable movie channel, and movie financing and production. IndusInd Media & Communications Ltd (IMCL) runs cable TV through the Incablenet brand while CVIL operates CVO, a Hindi cable movie channel. IN Network Entertainment Ltd. (INEL), a wholly owned subsidiary of HTMT, is in film and content finance, production and distribution.

    Recently, Zee Telefilms had announced its plans to de-merge Siticable, a wholly owned subsidiary, into a separate company called Wire and Wireless (India) Limited (WWIL). This would bring specific focus into the cable business and be attractive to investors.