Hathway Cable has recieved board nod to spin off its broadband business into a wholly-owned subsidiary.In an interview with CNBC-TV18, MD Jagdish Kumar G Pillai said the move would help the company focus better on the broadband business. He ruled out any plans for Hathway to sell stake in the subsidiary or list it.The board also approved increasing the company's fund raising limit from Rs 1,600 crore to Rs 1,800 crore.Pillai said the company would use these funds to invest in both the broadband and cable businesses. Below is the verbatim transcript of Jagdish Kumar G Pillai's interview with Ekta Batra & Mangalam Maloo.
Ekta: Can you take us through the rational for the demerger of the broadband business. Do you eventually plan to sell it off?
A: We are not selling it. We are demerging the business to a wholly owned subsidiary. Basically it allows Hathway to aggressively focus on the significant potential which the country has to grow broadband connectivity and within that segment high-speed broadband connectivity is what Hathway is particularly focused on. So to get better focus on that segment of our business we are carving out the business into a subsidiary.
Ekta: Would you look to get in a strategic investor or any financial investment in the broadband business in order to grow it at a larger scale?
A: There is nothing like that on the horizon as of now. It is more to do with the consumer focus which we have within that segment.
Mangalam: Any plans going forward to perhaps list the broadband business?
A: We do not have any plans on those lines. It is purely a business driven decision to focus more on consumer oriented business and to leverage the position which we have. So there is no intention to look at any future financial investors.
Mangalam: Another of the decision was also to raise the financing limit from Rs 1,600 crore to Rs 1,800 crore. What was that for? Was it for the cable business or the internet business?
A: It's a combination of both. We have a good plan to increase our cable footprint because the phase III deadline is fast approaching and also to build-up broadband footprint.
Mangalam: How much of that will you be allocating to the broadband business?
A: We do not have a separate limit as such for broadband within that limit but overall in the next six months we should be investing at least Rs 200 crore in our broadband business.
Ekta: Where would those Rs 200 crore be coming from?
A: It's a combination of debt and internal accruals.
Ekta: Can you chalk out what growth rate you are seeing in the broadband business as oppose to the cable business right now in terms of average revenue per user (ARPU) as well as subscriber addition?
A: We have seen significant growth in our broadband business because albeit not only us, the whole industry is seeing huge growth because of low penetration which is there of broadband customers in the country. So, on an annualised basis the growth rates are upwards of 50 percent. The cable business is growing but it is not growing at that level. It is growing because of the fact that its well entrenched business but the growth is driven by higher digitisation of the customers. So that is growing in the region of about 20-25 percent.
Ekta: Could you compare the bottomline for both the businesses as well as how much debt each business individually has at this point?
A: Our total debt is in the region of about Rs 1,100 crore.
Mangalam: How much of that will be transferred to the demerged subsidiary?
A: That is something we will do when we work out the scheme of demerger. We will announce that separately.
Mangalam: Could you give us the exit ARPUs for both the cable business and the broadband business in the last quarter?
A: We will make those announcements in our quarterly results in the first week of November.
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