Bloomberg News

Ambani Backs Viacom Indian Partner’s Acquisition in 4G Push

January 03, 2012

Jan. 3 (Bloomberg) -- Reliance Industries Ltd., controlled by billionaire Mukesh Ambani, will help Viacom Inc.’s Indian partner buy 12 regional television channels as it seeks to secure content for its high-speed data business.

Two companies owned by Network 18 Group will offer rights shares to raise 27 billion rupees ($507 million) each to fund the acquisition and reduce debt, according to a statement sent to exchanges today. Reliance will help Network 18 founder Raghav Bahl pay for his portion of the rights by setting up a trust to subscribe to optionally convertible bonds, according to the statement.

Network 18’s purchase of Eenadu Group’s assets for 21 billion rupees will help Reliance secure content from the company which runs CNBC-TV18, Colors and Nickelodeon in India, for high-speed 4G data services it plans to start this year. Reliance, India’s biggest company by market value, is seeking partnerships after spending 128.5 billion rupees to acquire licenses to provide the mobile services.

“Through this deal Reliance will have access to pretty much all genres of content, with the exception of sports,” said Jehil Thakkar, partner at KPMG India in Mumbai. “If this deal goes through, they’ll have targeted the urban consumer with a TV 18 suite, while also gaining a significant footprint in regional TV, which is a critical part of getting an India-wide footprint.’

Reliance’s Investment

Network 18 Media & Investment Ltd. and TV18 Broadcast Ltd. will offer the rights shares that will fund TV18 Broadcast’s purchase of all of ETV Uttar Pradesh, ETV Madhya Pradesh, ETV Rajasthan, ETV Bihar and ETV Urdu. It will buy 50 percent of ETV Marathi, ETV Kannada, ETV Bangla, ETV Gujarati and ETV Oriya and 24.5 percent in ETV Telugu and ETV Telugu News, according to the statement.

Bahl and other founders will invest 17 billion rupees in the rights offers that will be funded by Reliance’s trust. Reliance has invested 26 billion rupees in Eenadu’s ETV channels, the company said in a separate statement.

Network 18 Media, which dropped 72 percent in 2011, surged 20 percent to 46.6 rupees at the 3:30 p.m. close in Mumbai trading today, a record gain. TV18, which plunged 70 percent last year, advanced 20 percent to 33.65 rupees, its biggest surge since March 2009.

Reliance, with businesses including petroleum refining and retailing, bought a 95 percent stake in Infotel Broadband Services Ltd. for about 48 billion rupees within hours of the company becoming the only one to buy licenses to offer 4G wireless broadband services nationwide. The licenses in all 22 of India’s telecommunications zones cost 128.5 billion rupees.

Regional Languages

Bahl will use the proceeds of the rights issues to repay his companies’ debt and fund the acquisitions and working capital needs, according to the statements. Bahl, who has an equal venture with Viacom, is expanding into regional languages to tap an industry in which KPMG says revenue may more than double to 630 billion rupees in 2015 from 297 billion rupees in 2010.

‘‘Regional is very important -- regional television’s ad growth is faster,” said Abneesh Roy, an analyst at Edelweiss Financial Services Ltd. in Mumbai. “From a subscription revenue point of view, you need to have a bouquet which has all the genres. If regional was missing, it was a big issue for the scale-up of revenues. Now they’re closing the gap by getting those regional genres.”

Bloomberg News and Bloomberg Television’s Indian partner Bloomberg UTV compete with Network 18 in providing business and economic news in the South Asian nation.

--Editors: Arijit Ghosh, David Merritt

To contact the reporters on this story: Ketaki Gokhale in Mumbai at kgokhale@bloomberg.net; George Smith Alexander in Mumbai at galexander11@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net


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