The Zee group has firmed up plans for mobilising $ 600 m. This is to be done via a $ 200 m private placement by Siticable apart from the fact Zee TV itself would be raising $ 200 m via an ADR. Besides, the group also would be disinvesting 6% in Siticable which been valued at US $3.5 bn (Rs 154 bn) by a leading merchant banker.
Though $ 600 m may be a far cry from the original plan of $ 1.5 bn, the fact remains that it would enable the company to get its hybrid fibre coľaxial cable (HFC) network plan going. Subsequently, the company can raise more funds as and when it shows that it is able to collect the planned revenue of Rs 250 per household per month.
However, this is not going to be easy, as so far the cable operators have not been required to pay license fees etc. for setting up their network. And the assumption of Rs 250 per household per month does not assume a payout for the cable operators.
Besides, the fact remains that even Star and Sony would be offering their bouquet of channels at around the same price. So it is quite possible that an average household may pay around Rs 500 per household per month for his cable connection. There is bound to be some resistance from the households to the higher charges.
The next six months are going to be crucial for Zee since the success of its HFC venture is the main pillar on which its entire cable collection plans depend.
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