Jio GigaFiber moves closer to reality as Reliance’s Den acquisition gets approval

Deal will make Jio India’s biggest cable company

Jio GigaFiber, the wired service from Reliance Jio, moved closer to its mega roll-out plan after it received a crucial approval from the Competition Commission for the company’s purchase of Den Networks and Hathway Cable & Datacom.

The approval by the Competition Commission was seen as the main, if not the only, crucial regulatory approval required by the company to complete its ambitious deal of buying majority stakes in two of India’s largest cable feed providers, Den Networks and Hathway Cable & Datacom.

The CCI approval is important because, by acquiring Den and Hathway DataCom, Reliance will become India’s No.1 cable company with a share of around 20-25% or so in the cable feed market.

With the deal, Jio will be twice as big as its nearest rival in the MSO market.

Other big players in the market include Hinduja Group with its In Cable business, Siti Cable from the Zee family and Sun and Murasu in Tamil Nadu.

It was four months ago that Reliance Jio announced a plan to buy a 66% stake in Den for Rs 2,045 cr and a 51% stake in Hathway for Rs 2,940 cr.

It is estimated that nearly 27,000 cable networks — that serve about 2.5 cr households — get their signals from these two cable networks.

In its update, Den said that the 66% stake will be purchased under the name of three subsidiaries of Reliance — Jio Futuristic Digital Holdings, Jio Digital Distribution Holdings and Jio Television Distribution Holdings.

Out of the Rs 2045 cr invested by Reliance Jio in Den, about Rs 235 cr — based on today’s valuations of Den shares — will go to the current owners of Den.

The remaining money will be invested in Den to help it grow.

The three current owners who will get money from the deal are Sameer Manchanda, Lucid Systems Pvt. Limited and Verve Engineering Pvt. Limited.

After the deal, the total number of shares in Den Networks will more than double to 47.7 cr from 19.56 cr at present.

With the CCI approval in the bag, the next step for Jio is to make an ‘open offer’ to all investors in Den to purchase their shares at a particular valuation.

According to Indian rules, any entity buying 25% or more in a listed firm has to make an open offer to buy an additional 26% shares from the public.

Den said Reliance Jio has submitted the open offer letter to the SEBI, the securities regulator, and is awaiting SEBI’s comments on the same before going ahead.

On the other hand, the SEBI has sent its comments on the open offer proposal for Hathway shareholders.

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