Jio Gigafiber Launch: 3 Reasons Why Reliance May Acquire Hathway Very Soon!
Jio Gigafiber launch is getting delayed due to last-mile connectivity issue. And Hathway can solve this.
Rumor mills are right now abuzz with a very interesting news: Mukesh Ambani led Reliance Industries may soon acquire Hathway, and change everything the market dynamics for Jio Gigafiber.
There has been no confirmation from either Reliance or Hathway regarding this news.
Hereby, we present three reasons why this acquisition makes sense, and how it will help Jio Gigafiber for an early launch, pan-India.
Reason #1: Jio Gigafiber’s Launch Is Getting Delayed
Registrations for Jio Gigafiber had started since August 15th, but still, a full-fledged launch of the broadband service doesn’t look near.
As per some reports, cable operators in some locations are resisting the roll out of Jio Gigafiber, as it may completely washout their niche, and ‘steal’ their existing customers.
Jio Gigafiber will offer a bundled service: Along with highspeed broadband internet, there will be a set-top box as well, called Jio GigaTV, which will offer more than 400 channels, HD calling from TV and more.
This is a major disruption in the existing cable industry, and this is the reason most of the Local Cable Operators are resisting the last mile connectivity of Jio Gigafiber.
This is one of the main reasons why Jio Gigafiber needs the support of Hathway, for a full-fledged, smooth launch across 1000+ cities.
Reason #2: Hathway Is Huge, And It Will Help Jio Gigafiber
Hathway is right now India’s largest cable operator with 11 million digital cable TV subscribers and 800,000 broadband users (80% of them have high-speed broadband plan).
Besides, they have got home passes to more than 5 million home (they can push their services to these homes, based on their proximity).
These numbers mean that Hathway is powerful, and has a massive reach which can help Jio to leverage and expand their own network.
Besides, Hathway has recently joined forces with Netflix to provide their content directly on TV: This can also help Jio Gigafiber with content and popularity.
Reason #3: Hathway Has Massive Debts, And They Need Money
And lastly, Hathway too needs the support of Reliance, as they are under huge debt right now.
Although Hathway is right now valued at Rs 4000 crore, which is 11 times their Ebitda (earnings before interest, tax, depreciation and amortization), they also have a debt of Rs 1700 crore, which is 5 times their Ebitda.
Their average revenue per user has decreased from Rs 740 to Rs 690 right now, and this means that Hathway needs an infusion of capital funds to sustain their business.
To ease some burden, primary investors in Hathway (Raheja Group owns 43% share) have invested Rs 100 crore this year. But this cannot go on forever.
If Reliance does acquire Hathway, then it will help their share prices to rise as well. Ever since the rumors came out, their share prices have been rising consistently.
We will keep you updated, as more details come in.