Anil Ambani likely to hive off DTH, IPTV biz into new entity

After placing its film exhibition and processing business Reliance Media Works and FM radio and outdoor advertising business Reliance Media World under separate listed entities, Anil Ambani’s Reliance Anil Dhirubhai Ambani Group (ADAG) may soon hive off its DTH and IPTV under a new entity—Reliance Digital Works (RDW).

Currently, the group operates its DTH business under the brand name Reliance Big TV, which is a subsidiary of Reliance Communications. RDW, that has existed for some time now, is expected to initiate the process of demerger from RComm soon. RDW may also become the group’s launch vehicle in the cable distribution business, industry sources said.

However, it is not clear whether the group’s foray into cable distribution will be a part of RDW or its subsidiary. Reliance ADAG has been looking for a substantial chunk of cable subscribers to foray into the business of cable distribution which is currently pegged at over Rs 3,500 crore.

While both Reliance Media Works and Reliance Media World are listed entities on the Bombay Stock Exchange, the group has been looking for capital infusion in its growing DTH business–Reliance Big TV. “In near future, the company may look at listing RDW as well,” a source said.

According to investment banking executives, RDW may help the ADA Group unlock the right value for its existing direct-to-home (DTH) and IPTV business. “If any entity gets hold of DTH, cable and IPTV business under one roof, the signals points to the direction of attracting investments,” an investment banker said. “Moreover, the DTH business requires big cash even more now as there are six players competing for the business. Unless the companies are clearly demarcated, foreign investors are not interested,” a senior executive a leading brokerage firm said.

While the foreign investment limits for the IPTV sector are kept at 74%, the government is expected to announce an increase in the foreign investment limits for the DTH sector as well–from current 49% to 74%. A similar move may be recommended by the sector regulator for the cable business, Trai insiders said.

“If the norms on foreign investments are at par in DTH, IPTV and the cable business, it will give a big levy to any firm that houses all these services under one company,” a senior executive of an existing cable company…