India's leading multi-system operator (MSO), Hathway Cable & Datacom, has taken a cautious approach towards acquisition and will focus mainly on last mile purchases at a value that does not exceed 24 months of revenues.
"The valuation should fall within the corridor of 15-24 months revenue. The acquisition should make sense on ROI (return on investments). We have lined up acquisitions in smaller towns where we can have better subscription control and it will be easier to digitise," says Hathway Cable & Datacom managing director and chief executive officer K Jayaraman.
Hathway has added 100,000 subscribers through the inorganic route, including primary and secondary customers, during the fiscal. "We have an acquisition pipeline of 200,000 subscribers. We are looking mainly at primary direct points which will allow us direct access to the consumer homes. Inorganic wholesale acquisitions (MSOs) is not on our radar too much," says Jayaraman.
Is competition among the MSOs not pushing up the acquisition price of last mile? "There is an opportunity of last mile acquisition at fair prices in areas where the local cable operator is losing subscribers to DTH or where operating margins is diminishing," says Jayaraman.
Hathway has increased its secondary point (run through franchise operators) ARPUs by 4 per cent during the fiscal second-quarter. "Managing the secondary business more efficiently is the challenge. The thrust has to be on subscription revenues. Placement revenue will continue to grow," says Jayaraman.
Hathway has added 200,000 digital subscribers and plans to add one million digital set-top boxes in the fiscal. "Our focus is on organic growth. We are looking at digital and broadband growth," says Jayaraman.
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