MUMBAI: Rajan Raheja-promoted Hathway Cable & Datacom plans to raise Rs 1 billion as debt to fund the first phase of conditional access system (CAS). The multi-system operator (MSO) is also preparing to launch voice over internet protocol (VoIP) services by the last quarter of the year.

"We will require an investment of Rs 1 billion for which we will be raising debt," says Hathway Cable & Datacom CEO K Jayaraman.

The bulk of the investments will be towards subsidising the digital set-top boxes (STBs). Funding will also be required in setting up VoIP and expanding broadband infrastructure. The company has tied up with telecom major Bharti for VoIP.

"We are conducting test runs and expect to launch VoIP services by the year-end. MSOs will have to infuse capital in the changing business environment. On each STB, the subsidy works out to Rs 1,500," says Jayaraman.

The Telecom Regulatory Authority of India (Trai) has fixed the pricing of the boxes in the CAS areas. Cable TV service providers will have to offer digital STBs on a monthly rental scheme of Rs 30 and a refundable security deposit of Rs 999. There will be no payment for installation, activation charges, smart card/viewing card, repair and maintenance cost.

The cost of the STBs including the smart card is around Rs 3,500. "Once we drive in volumes, the price of procuring these STBs should fall by 15-20 per cent," says Jayaraman.

Hathway will also be aggressively pushing digital cable TV in non CAS markets. The MSO launched its digital services in Jalandhar a few days back, having rolled it out earlier in New Delhi, Mumbai, Pune, Bangalore, and Hyderabad.

"Starting with Jalandhar, we plan to roll out our digital services across Punjab over six months. In the first phase, 16 cities of Punjab will be connected by the end of this year," Jayaraman says.

The a la carte pricing of channels will increase the penetration of STBs in CAS areas, Jayaraman believes. "We expect a 80 per cent penetration if the broadcasters get the pricing right within a maximum of Rs 5 per channel," he says.