After stirring the telecom market with its competitive 4G offerings, Reliance Jio is now aiming to dominate the Indian DTH and broadband sectors. With its recent partnerships with Hathway Cable and DEN Networks, the telco has already thrown its intentions of capturing both the markets. Both Hathway and DEN Networks have a significant share in the Indian cable and broadband markets, and the partnership with these firms will help Jio to extend its reach. While Jio stated that it would start providing Jio GigaFiber services to the public by Diwali this year, but that didn’t happen as the telco faced last mile connectivity issues. By acquiring significant stakes in the said firms, Jio is looking to solve the issue. Jio’s aim is to reach 50 million subscribers in 1,100 towns and cities. The Jio GigaFiber service not only provides high-speed broadband service but it also comes bundled with DTH, VR, gaming and various smart home solutions.
Reliance Jio to Leverage LCOs and MSOs
With this recent acquisition, Reliance Jio has gained a significant upper hand as compared to other telcos when it comes to content and media distribution. With companies like Hathway and DEN Networks under it, the telco will have access to 24 million subscribers out of which two million are broadband users, lending it a large share of the pie. To put things in perspective, the total broadband market in India is pegged at 18 million majorly dominated by Airtel, BSNL and MTNL. However, with this new move, Reliance Jio will be able to deploy the forces of the many LCOs (Local cable operators) and MSOs (Muti system Operators) to facilitate last mile connectivity, which was something that Reliance Jio was struggling with before.
Now Reliance Jio also has access to 27,000 LCOs which it can leverage to provide its services to the subscribers. With time, when the telco slowly upgrades its services it can also ship triple play services packaging video, voice and data in a single subscription thus paving the way for an increased ARPU (average revenue per user).
Mihir Shah, vice-president at research firm Media Partners Asia, has also expressed his opinions about this new acquisition to Livemint saying that Reliance Jio’s recent buyout in the cable operators would bolster vigorous growth in the under-penetrated fixed-line segment. He further highlighted that Reliance Jio would get the opportunity of adding 24 million more subscribers to its chunk of 250 million subscriber which it boasts through mobile connectivity. He also added that this move would make Reliance Jio India’s most extensive distribution platform for linear and non-linear video content.
Shah added to his words, “We expect Reliance Jio might continue this path of inorganic growth focusing now on acquiring strong regional MSOs…while other smaller operators too might be compelled to join forces.”
Experts Predict Growth for DTH Sector
Shah went on to say that the demand for fixed-line broadband services is increasing with the increase in data usage by people. Reliance Jio will come to fill in the gap with its faster speeds, higher Fair Usage Policy limits, and a suite of new value-added services. Further, the new set-top box by Reliance Jio will enrich the viewing experience with higher speeds and much more use cases for broadband.
With that being said, experts are also a tad bit worried about the impact of this deal on the broadcasting industry. With such a monopoly in the content distribution segment, Reliance Jio will have a position of advantage to negotiate better deals with the broadcasters, which wouldn’t necessarily be an enjoyable position for these companies. Mihir Shah also remarked on this, as he said, “The new distribution behemoth will more likely seek to jointly negotiate in sourcing of linear and non-linear content feeds from broadcasters.”
Further, experts are of the opinion that the DTH industry will grow overall since Reliance Jio will be infusing upwards of Rs 5,000 crore to lay out last mile connectivity and better infrastructure. Also, analysts have expressed that the cost of customer acquisition will be lower for other companies as compared to Reliance Jio since the telco still has a lot of expenses to look for in the coming days. – Telecom Talk