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Cable majors in bitter war for consolidation

16-March-2001
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Cable majors in bitter war for consolidation

Zee’s Siticable, Hathaway’s Wincable and the Hinduja-owned Incable are all busy buying out sub-operators from rival networks or otherwise. Increasing number of acquisitions have been reported from several areas in Delhi, Mumbai and other cities. This new acquisition war has been fuelled by the drive for higher subscription revenues and a larger network to make way for broadband services.

Zee officials confirmed the SitiCable acquisitions in Delhi but details on the issue were not immediately available. The spokesperson did not discount the fact that the intensified acquisitions may ultimately strengthen the optic fibre cable network plans of Zee.

According to officials at Star which has a 26 per cent stake in Wincable, sub-operators have been changing sides frequently and are being lured by the multi-service operators with attractive offers which include profit sharing as part of the joint ventures and all-cash buyouts.

In the recent turn of events in several cities, the Zee, Star and Hinduja-backed MSOs have intensified buying out the sub-operators for consolidating their networks. A typical buyout offer is in the range of Rs 10-12 lakh for 600 connections. The valuation of the deal also depends on the collections, type of area and the prospects for broadband connectivity.

The MSOs are on this acquisition and consolidation spree as the smaller sub-operators cannot afford massive broadband investments and operational costs of such services.

Interestingly, while some sub-operators are sour over the expansion mode of the MSOs, some like an operator in East Delhi are in fact waiting to be run over by the tide. The operator feels that his 500-odd connections will be able to fetch him a tidy few lakhs in cash, a share in the subscription revenues and add to that a salary to run his business.

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