Mumbai: Cable television and broadband service firm Hathway Cable and Datacom Ltd has decided to demerge the company’s broadband business to start a wholly-owned subsidiary, Hathway Broadband Pvt. Ltd, the company informed BSE on Thursday.
Hathway Cable, promoted by the Raheja Group and one of the largest multi-system operator and cable broadband service providers in India, in a separate statement, said the move is aimed at accelerating value creation for Hathway Cable shareholders. “The separation will allow Hathway Cable to aggressively focus on the significant growth potential for high speed data and related services in India,” it said.
Globally, wireline or fixed broadband has emerged as a key driver of technology adoption. India lags most countries, including those in Asia, in fixed-line broadband penetration. According to a latest report by Telecom Regulatory Authority of India (Trai) released in April, India ranks 129 among 166 countries, below Bhutan and Sri Lanka in terms of broadband penetration.
Jagdish Kumar, managing director and chief executive officer at Hathway Cable, said the restructuring recognises that the market dynamics of the broadband business are unique as compared to its parent cable television business.
“The separation is a step towards increasing the broadband business’ customer focus and market competitiveness and in delivering a superior value proposition to our subscribers,” Kumar said.
The demerger will be subject to requisite approvals from the shareholders, creditors, high courts, department of telecommunications, stock exchanges, Securities and Exchange Board of India and other applicable regulatory authorities.
“The definitive terms and conditions of the proposed demerger are being evaluated. The draft scheme of demerger shall be placed before the board for approval,” the company informed the BSE on Thursday.
Hathway Cable’s total debt as on 31 March 2015 was Rs.1,186.41 crore. Separately, the firm’s board has given its approval to increase the limit from Rs.1,600 crore to Rs.1,800 crore for borrowing loans in excess of paid-up capital and free reserves.
In its filing to the BSE, the company said the board of directors has “given its in-principle approval to demerge, transfer and vest” the entire broadband business into Hathway Broadband.
