NXTDigital, the television channel aggregator, said it has signed on three MSOs in the India for its infrastructure sharing scheme, and expects the government to start approving these deals as early as this month.
“There are three partner clients,” said CEO Vynsley Fernandes, speaking to investors, promising to disclose the names once the ministry permissions are obtained.
Fernandes said the company has already signed agreements with these companies and whatever revenue comes from these deals will flow straight through to the company’s bottom line as the incremental expenses involved in implementing these deals are very very low.
NXTDigital hopes to start getting government clearances for these deals sometime this month.
The company took its present form two years ago when then the Hinduja Group merged its traditional cable business (MSO) with its satellite-based MSO business.
The satellite-based feed distribution business or HITS was started in 2015, long after the traditional cable business — under brands such as IN Cable and IN Digital — were started.
The new business leveraged a new approach to feed distribution compared to the traditional model used by all other feed providers, including IN Cable, Hathway, Siti etc.. Instead of relying on fiber connections to the cable operator’s headquarters, NXTDigital decided to use Ku band satellites to do the same.
Ku band satellites are also used by DTH operators. However, the key difference with NXTDigital was that the feed is not delivered to end-users, but to thousands of small cable TV operators across the country.
These operators then distribute the feed to their subscribers using their own local cable infrastructure.
However, the HITS business was launched at a time when most of the cable market in India had already been apportioned among the big players, and the company has not been able to grow its satellite-based MSO service as fast as some expected.
The company currently provides TV feeds to around 5.52 million subscribers, out of which a little over 3 million are serviced by the satellite-based HITS platform and the remaining are serviced using the traditional, fiber-based supply.
Out of the 9,000-plus cable operators to whom the company provides its aggregated TV feed, 6,500 are receiving theirs through the HITS platform.
With the broadcasting sector seeing a decline in consumer enthusiasm due to the increasing penetration of high-speed broadband services, the company has been approaching other MSOs or cable feed providers with the proposal of sharing its satellite platform.
This would save these traditional MSOs the trouble of maintaining long-distance fiber connectivity to their distribution partners (local cable operators), and they would be able to deliver their feeds using satellite.
“The services are being provided. It’s just a question of the competition and peers leveraging those services that are up in the sky for their own customers,” the CEO pointed out.
“What it means effectively is that the infrastructure that NXTDigital has put up is now also being shared by a competitor or a peer. There is, frankly, no unit economics. Everything above 1 paise goes to my bottom line, because there is no significant further investment.
“We are sweating an asset that is already deployed, that doesn’t have capacity constraints unlike fiber capacity or a hard disk.”
One of the MSOs that the company has tied up with is one of the top MSOs in the country, he added.
NXTDigital will send its agents to the premises of specific local cable operator partners of these companies to install the satellite reception equipment.
With these deals, the company believes that it will be easily able to double the total number end-consumers serviced using NXTDigital’s various platforms to 10 mln from around 5.52 million at present.
In addition to infra-sharing deals, the company is also heavily focused on rolling out its broadband business.
The company’s broadband business, albeit new, is present in cities like Mumbai and Bangalore.
Like other broadband players, the company’s One Broadband too has seen heavy take-up during the pandemic period.
Total subscribers have jumped 71% in one year to over 5 lakh now.
The company has taken a leaf out of the playbook of Mukesh Ambani-led Reliance Jio, and is tapping its existing relationships with local cable operators to expand its broadband service.
Yugal Kishore Sharma, who heads the broadband business, said the company is able to offer a better value proposition to its local partners than competitors.
He pointed out that due to its decades-long presence in the MSO market, the Hinduja group has an extensive network of fiber under the ground in cities like Mumbai, which helps in delivering high-speed upstream connectivity to its partners.
“So economies of scale, bandwidth costs etc can be leveraged,” he said.
Moreover, as a traditional MSO, it is easier for the company to attract and retain the trust of smaller partners and distributors.
“We have worked out an innovative model where we have smaller ISPs and distributors of other ISPs coming to us to benefit on overall cost synergies,” Sharma said. “That’s how our inorganic business is growing very fast.”
While the company is likely the fastest growing large-scale high-speed broadband provider in the country, its subscriber base is still on the lower side compared to competitors.
Compared to 0.5 million for One Broadband, Reliance Jio has around 3.3 million wired broadband users, Bharti Airtel has around 3.6 million, ACT has around 1.9 million and Hathway Cable has more than 1.1 million.
The company recently launched a combined cable+broadband+OTT offering in its core market of Mumbai.