Adding Value with Cisco Capital

Cisco Capital Asia Pacific

Adding Value with Cisco Capital

Cisco Capital provides tremendous value addition

- Mr. R. Sankaranarayana, president and COO, Asianet Satellite Communications Pvt. Ltd, Kerala, India

Mr. Sankaranarayana has been with Asianet for 15 years, more than three years in his current position of president and COO. Asianet is a 22-year-old company focusing on digital TV, broadband, and entertainment services. Asianet is part of the Rajan Raheja Group, and is a market leader in all of the services that it provides in the southern India state of Kerala.

Here are excerpts from an interview with Mr. R. Sankaranarayana:

When did Asianet first engage with Cisco Systems and what was the reason that Asianet chose to work with Cisco for the technology solutions?

We started dealing with Cisco in 2000 when we started our broadband division called Asianet Dataline. We chose Cisco because we knew that Cisco was a global technology leader in the space of routers, switches, communications, and broadcasting. We strengthened our relationship further in 2006 when we set up our digital headend and started digitizing our cable TV services. In the last eight years, our relationship with Cisco has grown tremendously, both in broadband as well as the digital TV services, mainly set-top boxes (STB) and digital headend equipment.

When was Cisco Capital introduced to Asianet? What was the need for Cisco Capital to be brought in?

We started engaging with Cisco Capital in 2007. As you know, this industry—especially the digitization and the broadband-rollout process—is very capital-intensive and the gestation periods are slightly longer. Cisco Capital helped bridge the gap, by providing the financing for the equipment as well as the STBs, which we have been sourcing from Cisco. That was a tremendous value addition from Cisco Capital, in terms of our growth plans.

What are some of the advantages you have perceived, while working with Cisco Capital, as compared to working with any other financial services provider, with regards to Asianet’s operations?

The main value Cisco Capital provides is that the team understands this business very well, as compared to other banks or financial institutions. We talk the same language, we are on the same wavelength, and they understand the industry, in terms of the government cycles, the policies, and the regulations. They are with us for accelerating our growth plans or slowing it down, depending on policy changes. Their terms of financing are also quite attractive compared to the normal financing we get from other financial institutions, with regard to interest rates and tenures. There is also a lot of flexibility in line with market changes. Cisco Capital really adjusts very well with our needs.

Would you be able to elaborate on some specific tangible benefits you’ve received by working with Cisco Capital?

Recently, when the digitization [implementation] deadline was to end in December 2014, although our [borrowing] limits had reached the ceiling, Cisco Capital came up with the ‘Emerging Fund’ to support us and to ensure that we don’t miss the growth opportunity with digitization. It really helped us in terms of accelerating our pace of digitization in the last six months.

Secondly, as I already mentioned, this is a capital-intensive industry and margins are thin at the moment, so the interest-cost saving on account of financing is a great advantage for us.

What kind of an impact has the digitization mandate had on Asianet’s growth plans?

The digitization mandate was spelled out by the government only a couple of years ago, while we had already started proactively digitizing in 2006. But, when the government put the deadlines in place, we started to accelerate our pace of digitization to ensure that we continue to be leaders in the markets that we operate in. In this respect, both Cisco and Cisco Capital really helped us by providing the best technologies, in line with market needs, and Cisco Capital was working in tandem with Cisco to help us meet our customer requirements.

If you look at the mid- to long term, what are Asianet’s plans and how do you map them to the macro-economic development in the country? How do you see Asianet grabbing the opportunity that this economic development presents?

India is one of the fastest-growing economies in the world and as it is said, communication, especially broadband, is going to really propel any economy’s GDP growth by a good multiple. India really has a long way to go in terms of broadband growth. As an ISP for the past 15 years, we have had the first-mover advantage in Kerala and we are now expanding to adjacent states and markets.

Today, broadband services are becoming a necessity for the common man and there is a tremendous opportunity for a company like Asianet to tap into this market. On the digitization front, the need for entertainment never stops. We are already providing 250 channels and we are planning to take it to 500 channels on our network very soon. This is going to add a lot of value to customers and this could help increase our ARPUs from an MSO [multi-system operator] point of view. Secondly, over the last 20 years, there has been a lot of leakage of revenue from the LCO [Local Cable Operator] to the MSO. Digitization is going to help in terms of plugging the leakage of revenue, so that is going to be a big benefit to the MSOs and the broadcasters. We’re really looking forward to faster digitization and faster broadband rollout.

What do you see in the future for Asianet and Cisco Capital’s engagement?

This is a turning point for Asianet. Two major things are happening: one is digitization—we have a plan to grow to 2.5 million subscribers in Kerala; we currently have 1 million, so there is a requirement for 2 million set-top boxes to reach our customers. The broadband rollout is another area of thrust for the company, to triple our subscriber base, which means more routers and switches and modems.

We have had a very strong relationship with Cisco in terms of technology and Cisco brings us a lot of value-added services such as VOD, multi-screen technology to the customers, and OTT, which we plan to roll out. Cisco has a lot of strengths in these areas, so we would like to partner with Cisco to be able to take these to our customers for their benefit as well as ours and Cisco’s.

What can we do, as Cisco Capital, to enhance our relationship and how we work together?

I appreciate the Cisco and Cisco Capital team for being with us, in terms of understanding our customers’ needs and being flexible in introducing new products, in terms of technology or in the financing arrangements. We look forward to a similar kind of understanding and flexibility to adapt to the changing needs. The market is changing very fast and there is a lot of competition coming in since everyone sees India as a very big market for digital and broadband services. So we want Cisco and Cisco Capital to be aggressive and flexible, as well as come up with innovative solutions and price points to cater to the large masses that India has, which will benefit Asianet and Cisco.