Rohit Mathur - Televisionpoint.com | Mumbai
Digital Entertainment Networks (DEN), the multi-system operator with a pan-India presence, is looking to mop up around Rs 500 crore through an initial public offering (IPO). The company, which has a subscriber base of around 10 million, will file its draft red herring prospectus with the Securities and Exchange Board of India (SEBI).

"The fresh issue of shares would result into a dilution of 15-20 per cent of the expanded paid-up capital of the company. The number of cable households in India is expected to grow to 130 million by 2013 from 90 million at present and we want to tap this market aggressively." says a company source to Televisionpoint.com.

Deutsche Bank is the global coordinator, while Antique Stock Broking is the book running lead managers for the IPO. DEN had raised around Rs 150 crore in the first round of private placement to IDFC and a foreign fund.

This would be the first IPO of a cable company in the country. Dish TV, India's largest direct-to-home (DTH) satellite TV player, is the only purely distribution company already listed on the bourses.

DEN has a majority interest in 62 cable operators serving 10 million homes and plans to grow its business further in the future through digital TV (DTV) upgrade, GePON broadband rollout, relevant low-cost content acquisitions and industry consolidation. The company has more than 0.3 million DTV users.

The company is 62.65 per cent owned by Sameer Manchanda, joint managing director, IBN18 and associates; with Raghav Bahl, promoter and managing director, Network18, being the founder member.

Post the IPO, the holding of Manchanda and associates will drop to 53.15 per cent. Bahl's holding, will fall from current 9.80 per cent to 7.1 per cent. The stake of IL&FS will drop from 15.47 per cent to 13.12 per cent.

DEN also has an equal joint venture with Star India, known as Star DEN, which aims to create a platform for distributing TV channels in India via all fixed networks including cable, DTH, IPTV, HITS and MMDS.

Star India has the option to take, from January 2010, majority control of the DEN. If Star decides to exercise this option of acquiring an additional one per cent stake, DEN will then have the right to sell its entire stake in the JV company to Star.

Star DEN currently has the rights to distribute 23 television channels, including the entire Star and Disney group of channels to providers of various television distribution platforms, such as cable TV, DTH and IPTV, in India, Bhutan and Nepal. It also distributes select Network18 channels, the Times Group channels and MGM.