India Telecom Operators Seek To Bolster Broadband Offerings To Fend Off Jio Threat

India’s top telecom operators are looking to fortify their broadband offerings to fend off competition from billionaire Mukesh Ambani’s Reliance Jio Infocomm, spurring a consolidation in the cable television and internet service market.

On Thursday, local media reports said Bharti Airtel, backed by Singapore Telecommunications, is planning to make an offer to buy cable network operator Dish TV owned by India’s Essel Group.

Singtel and Bharti are looking to acquire the founder’s 60% stake in Dish TV, CNBC TV18 said, citing sources it didn’t identify. The companies will pay around 61.5 billion rupees ($895 million) for the stake, the report said.

Bharti’s reported move comes as top Indian mobile phone companies grapple with rising competition from Jio, whose entry in 2016 triggered an intense price war. Jio’s cut-rate mobile data plans and free voice calls earned the company 100 million customers in the first six months of commercial operations, eroding the revenue and profits of rivals.

Jio launched fiber broadband service in July with a target to roll out services in in 1,100 Indian cities and connect 50 million homes. To fortify the operations, the company, in October, bought a controlling stake in two cable TV and internet service providers — Hathway Cable and Datacom and Den Networks for more than $757 million.

An investment in a cable TV operator will allow mobile phone companies to spruce up their last mile broadband connectivity and reduce fiber roll-out capital costs.

Jio’s parent Reliance Industries, which is spending more than $37 billion on its wireless venture, has been expanding its digital ecosystem at an accelerated pace in a bid to push users to spend more on data. Last year, it bought a stake in Indian music streaming service Saavn and in the U.S.-listed film company Eros International.

In 2017, it bought a 25% stake in movie and television show producer Balaji Telefilms.

To take on Jio’s financial might and shore up its balance sheet, Bharti Airtel had last month said it is raising $4.6 billion selling bonds and shares. In 2017, the company sold a 20% stake in its direct-to-home arm Bharti Telemedia, which operates under the brand Airtel TV, to Warburg Pincus for $350 million.

For Bharti, a deal with Dish will allow the combined company to become the largest cable television firm with 39 million subscribers, accounting for nearly 25% of the pay-TV households in India, brokerage CLSA said in a report.

A deal with Bharti allows the troubled Zee Group to pare its debt. The group is also looking to sell a stake in entertainment unit Zee Entertainment Enterprises.

A possible acquisition of Dish TV by Bharti will leave the domestic cable television industry with just two major independent players: Tata Sky, a joint venture between Tata Group and 21st Century Fox, and south India-focused Sun TV.―Nikkei Asian Review