Really, Is the Rs 4000 cr Acquisition of Network18 by RIL about 4G Play?

Reliance LogoFirst the news: Reliance Industries is acquiring Network18 Media & Investments Limited for Rs 4,000 cr. Independent Media Trust, owned by Reliance, will acquire 78% in NW18 and 9% in TV18. This is easily one of the largest take overs in the Indian media business.

Reliance said in a press release earlier today that the acquisition will differentiate Reliance’s 4G business “by providing a unique amalgamation at the intersect of telecom, web and digital commerce via a suite of premier digital properties.”

Network18 owns,,,,, Homeshop18, and broadcast channels including Colors, CNNIBN, CNBCTV18, IBN7 and CNBC Awaaz. As we’d pointed out, the digital content business hasn’t grown a whole lot in the last year.

Now we know that Reliance is dead serious about its 4G roll out. It has a whole suite of digital offerings lined up around the launch including music streaming, video calling, instant messaging and payment services.

We also know that content is set to explode with 4G connectivity. India’s appetite for smartphone and mobile data is also growing.  It is natural for the $67 bn group to not just control the pipe but also make money from the services that run on top of it (expect net neutrality debate to heat up soon). But really, a Rs 4000 cr acquisition to back its 4G play? Or is it payback time?  Network18 is had borrowed from RIL in 2012 for leveraged buyouts to expand its network earlier.  In 2012, through Independent Media Trust, RIL had invested in optionally convertible debentures from Network18’s promoter group. These can be converted to shares within 10 years from being issued (h/t: nixxin). RIL already paid for what it will now control.

What do you think?

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