Tuesday, June 10, 2014

Reliance Takes Over Network18

Reliance Industries Ltd. (RIL), an Indian conglomerate that is the parent of Indian MNO Reliance Jio Infocomm, has announced its takeover of one of the country’s largest media companies, Network18 Media and Investments Ltd. Through its investment arm, Independent Media Trust (IMT), RIL will spend INR 40 billion (US $674.75 million) to acquire a stake of 78 percent in Network18 and a 9 percent stake in its subsidiary TV18 Broadcast. In 2012 RIL had already invested an undisclosed amount in Network18 and its subsidiaries.

In October 2013, Reliance Jio won a unified telecom license in India, becoming the only operator that can provide 4G services across all of the country’s 22 circles. The operator is expected to launch commercial 4G services in November 2014. The acquisition of Network18 assumes great significance for the MNO and the Indian market in this context, and it fits right into RIL’s playbook. The conglomerate started out with textiles and pursued a strategy of backward vertical integration until it controlled every segment of the energy and materials value chain, from oil and gas exploration and production to petroleum refining and marketing to petrochemicals including plastics, fiber intermediates and polyester. With this latest acquisition, Reliance Jio will have the ability to differentiate its 4G services by bundling access to content without having to rely on a third party. Network18 has holdings in broadcasting, film, digital media, e-commerce, publishing, mobile content and allied businesses. Its subsidiary TV18 operates some of India’s biggest news and entertainment channels, such as CNBC-TV18, CNN-IBN, CNBC-Awaaz and general entertainment, music and children’s TV stations through a joint venture with U.S. media conglomerate Viacom. 
The access to content may prove to be a significant advantage. According to statistics from the Telecom Regulatory Authority of India (TRAI), the total number of mobile subscribers stood at 904.51 million as of 31 March 2014. Of this, 371.78 million (or 41.1 percent) of mobile subscribers live in rural areas. With the penetration of fixed line services, conventional media and PCs being low in rural India, the population there is increasingly reliant on mobile phones, particularly for accessing media content. This is a key growth driver for this market. Considering that rural teledensity (the number of telephone connections per 100 individuals living in an area) for mobile subscribers was 43.27, as against the urban teledensity of 139.86 as of 31 March 2014, there is massive potential in this market. By being able to provide access to exclusive or premium content and explore other synergies, Reliance is moving into a strong position ahead of its 4G launch.

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues:

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