Reliance Digicom to start ops by December
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Reliance Communications had announced the formation of Reliance Digicom in July after it acquired Digicable in an all-stock deal. Big TV (DTH arm of ADAG), IPTV and retail broadband along with the existing cable TV business of Digicable will be part of Reliance Digicom.
According to cable TV industry sources, Reliance Digicom is facing impediments due to differences over shareholding pattern in the entity, post merger. Also, there are diffferences among the stakeholders over the actual subscriber base and the number of cable operators who should come under the merged entity, sources familiar with the matter said.
According to sources in RCom, Digicable's holding in Reliance Digicom may stand at less than 15%.
However, Digicable wants a bigger share as it will bring 10 million out of 14 million subscribers of the merged entity, a source familiar with the matter said. Big TV DTH with 3.5 million and, Reliance IPTV and retail broadband with 0.5 million would complete the subscriber base.
While Digicable denied any trouble between the two parties over the proposed merger, Reliance Communications did not respond to email queries sent by FE on the formation of Reliance Digicom and its alliance with Digicable for over four days.
When contacted, JS Kohli, CEO of Digicable, strongly refuted any problem in Digicable's merger with RComm.
"We are happy to place on record that Digicable's merger with DTH, IPTV, broadband businesses of Reliance Communications is proceeding very smoothly as per plan and in fact a high level of integration has already been achieved between the two organisations to the extent that we have now started operating from common premises," Kohli told FE.
Industry analysts said the formation of Reliance Digicom will make ADAG the biggest media conglomerate as it is already present in film production and distribution (Big Pictures), FM radio and broadcasting (RBNL), film exhibition (Big Cinemas), animation (Big Animation), movie rental (Bigflix.com), and social networking (Big Adda) among others.
Reliance Digicom, once operational, will be the largest operator in DTH, cable, IPTV and broadband space.
However, experts said the challenges of mergers including synergy in human resources, information technology and billing will have to be tackled by Reliance Digicom before it becomes operational.
But the prospects of offering a vast array of consumer services like DTH, IPTV, broadband and cable by one entity does not enthuse experts.
"Be it DTH, IPTV or broadband offered by ADAG or the cable services of Digicable, they exist even today as business units. Merging them into one entity will not change the market scenario in the short and medium term or impact the business of rival firms," said Jehill Thakkar, head of media and entertainment in KPMG.
"However, the global trend is towards offering all services by one entity. In the US, both AT&T and Verizon are offering cable, broadband, and telephony though the business model and Arpu numbers are much higher compared to India," Thakkar said.
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