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 Indiantelevision.com'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.
Excerpts:
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? |
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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? |
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Are you looking at acquisition of cable networks as the entry route in different markets? |
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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? |
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You are banking heavily on the HITS model. How much are you going to invest in the venture? |
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How much are you going to invest in the overall business? |
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Why are you so bullish on digital cable when there is a very low STB penetration in the Cas (conditional access system) belt? |
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What will you offer that will make cable operators come to you? |
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Cable operators are willing to part with equity to those MSOs who are offering them more. Isn't that the deciding factor? |
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What brand building exercise you have put in place?
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. |
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Won't the cable business require huge doses of capital? |
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But for a venture capital fund, isn't analogue cable a matter of concern for its revenue leakages across the last mile? |
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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. |
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What are your views on Trai's regulation for non-Cas areas? |