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Liberty eyeing investment in Indian cable company

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MUMBAI: As the CAS story firms up, so too does the interest with which big international cable companies view the Indian scenario.

The most active on this front appears to be John Malone's Liberty Media Corp, which is eyeing an investment into the cable TV business in India. The company has initiated talks with Hinduja-owned IndusInd Media and Communications Ltd (IMCL) but no breakthrough has been reached thus far, sources say.

Late last year, a senior team visited IMCL headquarters in Mumbai but talks have stalled after that. A preliminary agreement on the valuations couldn't be reached, sources say.

When contacted, Hinduja TMT Ltd MD K Thiagarajan said the cable business of the company was attracting a "lot of interest from strategic and financial investors." But he refused to comment on whether the company was in talks with Liberty Media. "I can't comment specifically on any investor," he said. IMCL, which operates the cable business under Incablenet brand, is a subsidiary company of HTMT.

Sources say HTMT was looking at a valuation of around $900 million for its cable TV business. Interestingly, Zee Telefilms Ltd chairman Subhash Chandra said, in an interview to a business channel, that the value of his cable assets ought to be in the region of $800-900 million.
Liberty, however, is waiting to see how conditional access system (CAS) rolls out. Investors feel digital cable TV will help organise the industry and bring subscribers under the addressable system. Average revenue per users (ARPUs) would also go up.

If Liberty does make an entry into India, then it will be Malone's second big entry into the Asian market after Japan. According to the latest report by Hong Kong-based Media Partners Asia (MPA), Liberty-controlled J:COM, the most successful broadband cable TV operation in Asia and in Japan, will April 15 launch HDR services (High Definition Recorder capabilities with a High Spec Double Tuner Recorder), a new J:COM digital service available in all J:COM franchises, which pass 7.9 million homes.

Zee Telefilms has already announced its plans to de-merge Siticable, a wholly owned subsidiary, into a separate company called Wire and Wireless (India) Limited (WWIL). This would bring specific focus into the cable business and be attractive to investors.

Queried by Indiantelevision.com earlier as to whether he saw the demerged cable business (Siticable) and the direct consumer services business (Dish TV) as being the most likely to invite international interest for strategic and financial partnerships, Chandra had replied in the affirmative.

HTMT is also planning to de-merge the company's IT/BPO and media businesses into separate entities. "It couldn't be done this year because of certain taxation issues. The programme is still alive and we hope to de-merge early next fiscal. A committee of directors are looking into the issue," said Thiagarajan.

When asked whether HTMT would de-merge after selling its stake in Hutchison Essar Ltd, Thiagarajan said he wouldn't like to comment on the issue. HTMT, together with its wholly owned subsidiary InNetwork Entertainment Ltd, is holding 91.54 per cent of IndusInd Telecom Network Ltd (ITNL) corresponding to a 4.68 per cent effective stake in Hutch. HTMT plans to exit from the telecom business and sale out its entire stake before Hutchison Essar goes for an initial public offering (IPO).

With Zee de-merging its cable subsidiary, foreign companies may now turn their eyes on WWIL. And with CAS rollout imminent, Liberty, Comcast and Time Warner Cable may seriously look at setting up a footprint in India.

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