'Cable companies should start thinking like DTH operators' : EVS Chakravarthy - You Telecom CEO

Having acquired a broadband company in 2006, Citigroup Venture Capital International has set its eyes on the cable TV business. You Telecom has floated a subsidiary to meet the FDI (foreign direct investment) guidelines for cable and acquired Bangalore-based Digital Infotainment, a small-sized cable network.

You Telecom intends to invest Rs 7 billion over four years as it takes steps to enter the digital convergence space. Banking on building a Headend-In-The-Sky (HITS) platform, the company plans to invest Rs 1.2 billion in the first phase of infrastructure.

In an interview with's Sibabrata Das, You Telecom CEO EVS Chakravarthy talks about the onslaught from direct-to-home (DTH) players to grab the digital space and the need for cable TV operators to up their services and invest in brand building.


Since Citigroup Venture International holds 85 per cent in You Telecom India, how are you restructuring the foreign holding to stay within the regulatory cap of 49 per cent so as to kick start cable TV operations in India?

We have set up a company called Digital Outsourcing where Citigroup holds 49 per cent. The balance 51 per cent is being held by high net worth individuals. We have done the capital restructuring in the cable TV company to meet the FDI guidelines.

Did Citigroup buy out the Mumbai-based broadband company from British Gas in 2006 because it saw opportunity in expanding the footprint to cable TV?

We will probably be the only pure broadband player to get into cable TV. Unlike Sify and the other ISP operators, we have built a cable-based infrastructure. So it is a logical extension for us.

Are you looking at acquisition of cable networks as the entry route in different markets?

Digital Outsourcing has bought 50 per cent stake in Bangalore-based Digital Infotainment. This is our entry into cable TV operations. We will be rolling out digital services in the next couple of weeks. In other markets, we are also looking at people who could partner with us through joint ventures where we will be offering multiple services.

Why have you set up a headend in Delhi but not yet rolled out services? Is it that you don't have a content tie-up with broadcasters?

Though we have set up a headend in Delhi, we haven't started operations. We are looking at opportunities like a JV or a 100 per cent buy out. We are also looking at an outsourced service model for digital solutions to cable operators as one option.

You are banking heavily on the HITS model. How much are you going to invest in the venture?

We will be investing Rs 1.2 billion in the first phase for setting up the HITS infrastructure. We are waiting for the government to come out with the regulations before we go ahead. We expect the Telecom Regulatory Authority of India (Trai) to come out with its recommendations on HITS in the next 2-3 weeks. For the digital solutions including set-top boxes, we will be using Scientific Atlanta. And for HITS, we will also be looking at Motorola.

How much are you going to invest in the overall business?

We plan to invest Rs 7 billion over four years. This will be in addition to Rs 4 billion that we have already put in for laying out the infrastructure for broadband. We will be doubling our footprint to 24 cities.

Why are you so bullish on digital cable when there is a very low STB penetration in the Cas (conditional access system) belt?

2008 will be the defining year for digital. After Reliance launches its DTH service, expect fireworks on the ground to start. The cable industry is not fully prepared to combat the DTH onslaught. Cable operators will have to figure out who is going to provide them with the right ammunition to fight DTH tomorrow.

'MSOs should have a one-million digital box seeding plan. Then everything will fall in place'

What will you offer that will make cable operators come to you?

It's high time cable companies started thinking like DTH operators. Cable TV has to match DTH service standards - be it brand building, billing, marketing and services. Multi-system operators (MSOs) today are not concentrating on that. They will have to support the last mile operators with all these things. Otherwise, how are the operators going to fight DTH on behalf of the MSOs. The old mindset has to change. There has to be a complete revolution in digital cable and related services like broadband. If the old MSOs don't do it, new players like us will show the way.

Cable operators are willing to part with equity to those MSOs who are offering them more. Isn't that the deciding factor?

In the initial land grab situation, it is capital. But in the medium term, it will be quality of management and the systems and processes they work with. The valuations operators are asking for has gone up dramatically with new MSOs entering the field. But it is like the sensex; it will not last forever. We are not willing to pay exorbitantly just because we want to expand our size. In cable, it is important to remember that there is no case of first mover in the consumer's mind. The future battle in cable will be for grabbing attention in the consumer space through brand building and quality of service. The MSOs have never thought of this as a strategy. And don't forget that HITS will open up the smaller towns and networks. So the opportunities down close down for any new entrant.

What brand building exercise you have put in place?

We have an equity capital reserved for brand building. Bennett & Coleman Company Ltd (BCCL), the holding company of the Times of India, has a five per cent stake in You Telecom. We are looking at doing more such media deals. We are setting in a discipline by allocating equity for brand building.

We have also invested in technology. We have introduced the Oracle-based billing system which we are willing to outsource to others. We have 170,000 broadband subscribers, spread across 12 cities including Mumbai, Bangalore, Chennai, Hyderabad, Gurgaon, Surat, Baroda, Ahmedabad, Rajkot and Pune. Our broadband ARPU (average revenue per user) is Rs 460. Our revenues will be Rs 1.10 billion this fiscal with just broadband in our business mix at this stage.

Won't the cable business require huge doses of capital?

We realise that growth needs capital. Citigroup is committed to infusing capital to grow the business. We have a plan in place.

But for a venture capital fund, isn't analogue cable a matter of concern for its revenue leakages across the last mile?

When Citigroup bought out the company from British Gas, they looked at the convergence space. We are uniquely positioned in that we already have a good broadband play. When we are in cable, we are only extending our laid out infrastructure to a new area of business. It is important to remember that a single service play is like an analogue video play. We see alliances emerging with broadcasters and cable networks across the value chain.

What is the challenge for MSOs in digital cable?

MSOs should have a one-million digital box seeding plan. It is possible with a well-evolved cable eco system. Once an MSO has such a deployment, then everything will fall in place. It will be like building a long lasting real estate value - with multiple services including broadband, cable TV, gaming and VoIP. Later we will see bigger cable companies converting carriage fee into equity in broadcasting networks.

What are your views on Trai's regulation for non-Cas areas?

The regulator has given it some shape. If the MSOs had implemented Cas more successfully and effectively, then Trai perhaps would have been confident of extending it to other areas.

Latest Reads
BTVI and AutoX magazine join hands to launch ‘The AutoX Show’

Business Television India (BTVI), India’s Premier English Business News Channel, has teamed up with AutoX Magazine, India’s fastest growing automotive publication and portal, to launch the ‘The AutoX Show’

Television TV Channels News Broadcasting
Guest Column: Content is king, but is distribution still God?

A linear channel goes through multiple layers of distribution intermediaries on ground. 

Television TV Channels Viewership
BTVI Money Mantra hits its ground in Mumbai and got a great response

Money Mantra an initiative by Business Television India (BTVI) was welcomed by the audiences.

Television TV Channels News Broadcasting
ZEE takes one more giant pioneering step - builds a technology platform to satisfy 5 senses of the viewers to offer immersive customer experience!

Mumbai: ZEE Entertainment Enterprises Ltd. (“ZEE”), a global media and entertainment powerhouse, has taken a yet another pioneering giant leap by securing a United States (US) Patent on a technology platform developed in the Silicon Valley at its very own - ZEE Media Lab. This unique platform stems...

Television TV Channels People
Don't believe in just passive communication: BTVI's Anuj Katiyar

It’s been two years since BTVI has come into the English business news picture. A tough nut to crack, the channel has been at it by first challenging the incumbents and later by revamping itself to suit the new generation of business news viewers.

Television TV Channels News Broadcasting
Star Sports unveils #BattleofSixes campaign for the upcoming PAYTM India- West Indies ODI and T20 series

This festive season is set to take cricket fans by storm as the battle of sixes begins with India taking on West Indies in the PAYTM ODI and T20 series, starting Oct 21st and November 4th, 2018 respectively.

Television TV Channels Sports
LaLiga Football Schools launch in Kerala

LaLiga, Spain’s top football league, recently launched the LaLiga Football Schools in India. It is a comprehensive grassroots football development programme in association with India On Track

Television TV Channels Sports
Triple gold medalist and former autralian olympic swimmer, stephanie rice debuts as an expert presenter on vivo pro kabaddi season vi in india

This season Star Sports, the official broadcaster for VIVO Pro Kabaddi League 2018 lifts the spirit of the game a notch higher with the announcement of three - time Olympic Gold medallist, Stephanie Rice, as an addition to the illustrious expert panel.

Television TV Channels Sports
IndiaCast rejigs revenue top brass in bid to grow across markets, platforms

In a move aimed at synergizing processes and business opportunities to scale up revenues, IndiaCast, the domestic, international and digital distribution arm of Viacom18 and TV18, today, announced an organizational rejig of its revenue management structure.

Television TV Channels People

Latest News

Load More

Sign up for our Newsletter

subscribe for latest stories