MUMBAI: Cable operators dry of cash for digital implementation can now look forward to Cisco Systems, Inc. The global networking equipment and network management giant is willing to finance cable operators in India as it sees opportunity in riding the digital cable wave to push its set-top boxes (STBs).
There is a catch, though: operators will have access to the loan only if they use STBs from Scientific Atlanta, the company that Cisco acquired to bulk up on businesses that cater to consumers.
The debt will be provided through its wholly owned subsidiary company, Cisco Capital.
Cisco has approached several small and medium-sized operators in the Cas (conditional access system) areas, offering a variety of financing options. "We are willing to provide soft loans to cable operators which can be paid over a period of time. This way we can push our digital end-to-end solutions including headend, encryption system and boxes," says a source in the company.
The loan size will depend upon the credit worthiness of the operator and the funding will be made available in phases. "We won't be funding the cable network in one go, but infuse it in several doses," says the source.
Cisco realises how tough it will be to evaluate the health of the cable networks. "Most of them do not have proper documents and it is difficult to rate their creditworthiness," the source adds.
Among the cable operators Cisco has initiated talks are Kolkata-based Manthan and JPR Network, an independent operator in Mumbai. But there are no takers yet.
"We are more interested in equity than in debt. As we will have to subsidise the STBs, it will be very difficult to recover and repay the loan. The average revenue per user (ARPU) from Cas subscribers is also low. Besides, Scientific Atlanta boxes are more expensive than what is available in China and Korea," says JPR Network promoter Raja Nadar.
Cisco, however, believes its end-to-end digital solutions and the pressure cable operators face to put quality infrastructure in place will drive in good business. "There is just a 20 per cent difference between what we provide and what others are offering. But we have a better system and bridge an end-to-end requirement," the source says.
Rajan Raheja-promoted Hathway Cable & Datacom and Asianet are using the Scientific Atlanta headend, STBs and encryption system, the source adds. Hathway, in which Star has a 26 per cent stake, already has seeded Humax STBs and uses News Corp-owned NDS encryption systems.
For Hathway, Scientific Atlanta is going to be a second supply vendor as the market for digital cable expands.
Cisco acquired Scientific Atlanta so that it could tap the rapidly growing cable, satellite and IPTV markets across the world.
