MUMBAI: India‘s John Malone is on a roll. Earlier this week, the Sameer Manchanda headed cable TV MSO Den Networks announced that it was going for a preferential allotment to Goldman Sachs affiliates ($110 million) and a qualified institutional placement (QIP of $50 million) which would allow it to raise a total $160 million (Rs 865 odd crore). This is the largest transaction in the Indian cable TV sector.
It informed the BSE today that the deals had gone through - the preferential allotment went through the day before and the QIP yesterday - and that the divestment amounts to 24 per cent of Den Network‘s equity. Goldman Sachs had J. Sagar Associates as an advisor while the Hong Kong office of Herbert Smith Freehills acted as the international legal counsel. Den Networks had Amarchand Mangaldas as its advisor.
Indiantelevision.com caught up with a very cheerful and confident Den Networks COO M.G. Azhar late this evening. This is what he had to say: "We are delighted to have Goldman Sachs as our partner. It has a long history of constructively driving consolidation, digitisation in various markets across the world. Their association will help us in transitioning through various cycles as business transforms."
Azhar adds that the deal should encourage other private equity firms and investors to invest in Indian cable TV. "It needs lots of investment. Millions of homes have to be digitised over the next year or so. The investment in Den clearly reflects that the progress of digitisation has helped regain investors‘ confidence in cable TV," he says. "Other Indian cable TV firms should also benefit."
Azhar points out that Den Networks will not be looking for any more funds as the current cash stash should meet its needs for at least two years. He says that the money will be used to "drive digitisation, further consolidation and expansion, broadband and also make investments in scaling up Den Networks to handle the changing business environment."
The company says it is going to start its broadband services in the not-too-distant future in one metro and one tier II city and take it up from there.
He explains: "Digitisation has progressed well in phase I and phase II. Now we have to segment the market. Digitisation has freed us to offer PVR services, HD feeds, PPV, and other value added services. The average revenue per user undoubtedly will go up. There is a lot of potential; there is a lot of value that has to be unlocked."
