(29 August 2009 9:00 pm)

MUMBAI: The year 2009 could be historic for Indian cable TV companies as they plan to tap the capital market to fund their expansion into digitisation, move into corporate accountability, and create a wide pool of professional executives.

After Digital Entertainment Networks (DEN), it is Hathway Cable & Datacom that is readying for an initial public offering (IPO). The largest multi-system operator (MSO) in terms of revenue is firming up details as it requires funding to seed more digital set-top boxes (STBs) and expand its broadband business.

Hathway Cable & Datacom, industry sources say, is looking at a public float to raise around Rs 2.5 billion. "The MSO has already raised money from private equity and would not be requiring a larger sized IPO. It also wouldn't like to dilute too much," sources add.

Promoter Rajan Raheja owns around 58 per cent in Hathway Cable & Datacom while Star Group has 22 per cent and ChrysCapital 14 per cent. The regulation in India requires cable TV companies to cap their foreign holdings at 49 per cent.

"The flexibility of diluting too much could also be constrained by the high presence of foreign holding in the company," a source says.

Hathway was also toying with the idea of merging Asianet Satellite Communications, the largest MSO in Kerala privately held by Raheja, with itself. After valuing Asianet and fixing the share-swap ratio, the consolidated entity would then have gone for a public float.

Another option being explored is a listing through the reverse merger route. This was to be followed by a QIP (Qualified Institutional Placement) to raise funds.

"The Hathway-Asianet merger is most likely not happening. And it looks almost certain that Hathway would go the IPO route," the source says.

The Hathway Cable & Datacom board is scheduled to meet in September.

"Hathway will watch DEN's IPO and take a decisive call. The size of the IPO would also depend on market conditions and the valuation that Hathway gets," the source says.

DEN, the MSO jointly floated by IBN18 joint MD Sameer Manchanda and Network18 founder-promoter Raghav Bahl, is planning to raise $100 million through an IPO.

Hathway has made several acquisitions over the last one year including two mid-sized cable TV companies, Bhaskar Multinet Ltd (the cable TV arm of Dainik Bhaskar Group) and Gujarat Telelinks.

India has two big cable companies, Wire & Wireless (India) Ltd and IndusInd Media & Communications Ltd (housed under Hinduja Ventures Ltd), that are listed on the bourses.

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