Hinduja Ventures recently reorganised its media business by de-merging Headend-in-the-Sky (HITS) business owned by Grant Investrade and merging it with Induslnd Media and Communications. Grant Investrade acquired government approvals for HITS last year and rolled out digital television distribution business under NXT Digital. The changes were made to consolidate cable business in one entity and strengthen the position of IMCL. In an interview with BusinessLine , Ashok P Hinduja, Chairman, Hinduja Group of Companies (India), spoke on his vision for the Group’s media venture. Excerpts:
What is the thought behind the reorganisation in media business?
It was to synergise the strengths of both the platforms (digital television distribution and cable). It will deliver a fully encrypted digital cable service at a national level with uniform high quality and consistency.
While doing this we will help those local, independent and smaller multi-system operators (MSOs) to sustain and retain their business identity, which have been painstakingly built, without them having to invest in expensive digital infrastructure.
How will this help to improve IndusInd Media business?
It will bring about synergies of scale, uniform quality of service, packaging, billing and customer service. Cost efficiencies will enable IMCL to provide optimum pricing and freedom of choice to customers. It will help the cable digitisation required to cover Phase III and Phase IV markets of over 7,000 towns and another over six lakh villages.
IMCL has been a key access MSO to cable operators across the country.
As a single integrated company, IMCL can fulfil the needs of local cable operators (as B2B) and provide high quality digital services (B2C) to end customers. India continues to have over 150 million homes connected through cable service. Of this, hardly 35 million has been digitised. Presence of a complementary technology platform like HITS would contribute to the cause of rapid cable digitisation.
How does the launch of HITS help consumers? Will it bring down cost for consumers and plug revenue loss for the government?
Yes, the cost efficiencies and freedom of choice of channels to customers will enable them to choose most cost-effective packages. They will be able to pick, choose and pay for channels of their choice and create packages in line with their desire and purse. We are constantly trying to reduce cost of equipment to consumer and small MSOs. When digital cable system becomes a reality across the country, the Government will get additional revenue from all the customers by way of service tax, entertainment tax and income tax. The scourge of under declaration will ultimately die out.
\ What does it mean for shareholders of Hinduja Ventures?
Shareholders should be essentially happy and pleased, because ultimately this should bring a higher valuation for HVL consequent on expedited breakeven and better financial performance of the media subsidiary.
Are there plans to list IndusInd Media on stock exchange?
At an appropriate time the Board of HVL will decide a route to market for investors and shareholders – may be by way of an IPO or any other way to list IMCL shares.
How do you see the roll out of phase 3 and 4 of digitisation considering that transmission of signals in analogue mode is still prevalent?
The Ministry of Information and Broadcasting has set the analogue ‘sunset’ dates as per an Act of Parliament. They need to ensure implementation by removing legal challenges and hurdles. Unfortunately, various interest groups filed cases in high courts and got a stay order. The Supreme Court has ordered in March that all these matters be heard centrally in the Delhi High Court.
The delay in transferring the cases to the Delhi High Court has resulted in stalling digitisation efforts. With analogue signals still prevailing, the State and Central exchequers are incurring huge revenue loss due to under reporting by operators. At the end of the day, the question that needs to be asked: ‘who is benefiting from this delay’? May be one immediate step that can be taken by the Government is to direct broadcasters to shut analogue signals in non-stayed Phase 3 areas which had taken effect from December 31, 2015. A Government diktat on this issue needs to be enforced by nodal officers in all such areas.
Are you happy with the pace of digitisation roll-out?
Delay in pace of digitisation is adversely affecting rollout plans behind which there have been huge investments. Phase III and Phase IV could have moved faster with technologies like HITS. It could have also helped the Government to achieve its goal of Digital India, and also to plug revenue losses.
How do you see competition from Netflix, Reliance Jio and DTH?
Every technology platform will have its cost advantages and disadvantages besides its strength and weakness. Each would be relevant based on various socio economic factors, localisation of content etc. Competition in this field will increase, but we firmly believe that our distribution platform provides digital cable and a wide range of value added services like pay per view, multi-screen viewing. Cable has a greater versatility for pan India delivery — both on fixed TV sets and mobile devices.