Ortel to invest Rs 300 crore to spruce up infrastructure

MUMBAI: Ortel Communications, Odisha’s largest multi-system operator (MSO) that provides cable TV and high-speed broadband services, will invest Rs 300 crore in the next two years on expansion.

Bibhu Prasad Rath, president & CEO, Ortel Communications, said the company would use IPO proceeds, debt and internal accrual and equity to meet its funding requirements.

“For rapid expansion in emerging markets, Ortel Communications is investing Rs 300 crore over the next two years on its infrastructure. The investment would strengthen the reach, efficiencies and competitiveness of Ortel Communications in the industry,” Rath said, adding, “Ortel is one of the few MSOs which focuses on B2C segment with full control over the last-mile network and directly owns 90% of its subscribers.”

According to analysts, full control over the last-mile network ensures a uniform quality of service, minimal leakages, and a control on billing of subscribers and collections.

The company, which has remained focused on Odisha, Chhattisgarh, Madhya Pradesh, Andhra Pradesh, Telengana and West Bengal, commands a subscriber base to about 805,000 as on September 30, 2016, compared with national MSOs, such as Hathway Cable & Datacom, Siti Cable and Den Networks, who claim a base of over 10 million subscribers each.

Rohit Dokania, senior VP -research at IDFC Securities, said: “Ortel has probably the best business model among all the MSOs in India as it controls the last mile. However, the investor community is not actively looking at the company because its lack of scale. If it can invest to build scale rapidly and clock over a million subscribers, it may be a much better opportunity.”

Ortel, which boasts of building up a two-way communication network enabled for ‘Triple Play’ services including video, data and voice capabilities, is learnt to have set an ambitious target of achieving close to 1 million subscribers.

According to Rath, the company has grown its subscriber base both organically and inorganically. "Organic route is slower, as one needs to burn cash while competing with local cable operators (LCOs). The inorganic growth is much faster and efficient but requires upfront capital. However, both are complementary and required to drive each other,” Rath added.

Over the past few years, Ortel has largely focused on the inorganic route and acquired some LCOs.

“In the past six quarters, we have added close to 275,000 subscribers. Also, over 80% of the new subscribers have been added in the non-Odisha markets,” Rath added.