Share prices of broadband providers plunged on Thursday after Reliance Industries announced the launch of JioGigaFiber. The share prices of Den Networks, Hathway Cable and Datacom and Siti Networks fell by 10.73%, 15.40%, and 2.76%, respectively. The stock of Den Networks hit a one-and-a-half-year low and ended Thursday’s session at Rs 66.55.
Reliance Industries Limited (RIL) chairman Mukesh Ambani on Thursday announced the launch of JioGigaFiber service the company’s ultra high speed fixed line broadband services for homes and enterprises.
“We will now extend this fiber connectivity to homes, merchants, small and medium enterprises and large enterprises simultaneously across 1,1 00 cities to offer the most advanced fiber-based broadband connectivity solutions,” said Ambani while speaking at the company’s 41st annual general meeting.
Ambani said registrations for JioGigaFiber would start from August 15, and said the company will prioritise its rollout to those localities from where it receives the highest number of registrations. Ambani further said the company has already invested over `2,50,000 crore for creating the state-of-the-art digital infrastructure to provide mobile and broadband connectivity across the country, with the largest fiber footprint. The entry of Reliance Jio disrupted India’s telecom industry by sparking a price war and forcing existing players to merge or exit.
“The disruption is for real, and we see the impact of their entry in the mobile segment. The market fears are not unfounded completely,” said a market participant on the condition of anonymity.
When asked about the outlook for broadband provider stocks A K Prabhakar, Head of Research at IDBI Capital said it is better to avoid these stocks. “These companies are not making profits. Already these companies are not making enough margins.”
Den Networks reported a net loss of Rs 17.11 crore in FY 18; the company had post posted losses in the last four fiscals. Hathway Cable and Datacom posted a loss of `107.86 crore in FY 18 and is posting a loss for the fifth consecutive financial year. Siti Networks has been posting losses since its listing on FY 07. – Financial Express