Indian DTH firm DishTV has received shareholder approval to raise up to US$200m by issuing new equity or convertible securities.
A spokesman for the group said it received the go-ahead for the move, although there were no immediate plans to raise the…
Indian DTH firm DishTV has received shareholder approval to raise up to US$200m by issuing new equity or convertible securities.
A spokesman for the group said it received the go-ahead for the move, although there were no immediate plans to raise the capital.
In a notice to shareholders, DishTV said it wanted the ability to raise the funds in the domestic or overseas markets through a qualified institutional placement (QIP).
QIP is a tool primarily used in India to issue equity – or other securities that can be converted into shares – to qualified institutional buyers under an accelerated process.
DishTV said in its notice that the QIP could be offered at a discount of up to 5%.
Outlining reasons for the plan, the notice explained: “[The] Direct-to-home business is highly capital intensive and huge amount of financial resources are required to meet the expansion and growth requirements from time to time.”
The company also pointed to the recent relaxation of foreign ownership rules as a reason why shareholders should vote for the capital increase. These changes increased the maximum share that a foreign investor can own in an Indian DTH company from 49% to 74%.
DishTV is part of Indian conglomerate Essel Group. It launched commercially in 2005 to become India’s first DTH player and today it claims to be the largest in Asia, with a gross customer base of 13.9 million as of 30 September 2012.
The company has grown rapidly on the back of the increasing spending power of India’s upwardly mobile population in recent years. It had 185 channels and a market capitalisation of Rs 21.1bn (US$380m) in 2008. Today this stands at 409 and Rs 86.2bn (US$1.55bn), respectively.
For the three months to the end of September 2012, DishTV posted gross operating revenues of Rs 5.2bn (US$94m), compared with Rs 5.34bn (US$96m) for the previous quarter. Its EBITDA for the quarter ending September was roughly flat on the previous period at Rs 1.56bn (US$28m).
