The Telecom Regulatory Authority of India (TRAI) has recommended that the foreign direct investment limit for the country’s DTH companies be increased from 49% to 74%.
The announcement was part of a series of proposals to adjust existing FDI limits, with…
The Telecom Regulatory Authority of India (TRAI) has recommended that the foreign direct investment limit for the country’s DTH companies be increased from 49% to 74%.
The announcement was part of a series of proposals to adjust existing FDI limits, with the regulator also advocating an increase in the foreign ownership threshold to 74% for teleport, HITS (head-end in the sky), IPTV and national and state cable companies.
Mobile TV companies, which until now had not been directly mentioned as part of FDI discussions, will also see their foreign ownership limits capped at 74%.
The recommendations have now been sent to the Ministry of Information and Broadcasting. Earlier this year, the ministry had requested TRAI review its 2008 recommendations on foreign investment in the country’s broadcast sector in light of recent changes in FDI policy. On March 31 2010, the Department of Industrial Policy & Promotion issued a new consolidated FDI policy in which the methodology of calculation of FDI was changed.
TRAI’s recommendations will be a significant fillip for News Corp in particular as the media giant has been seeking to raise its stake in India’s second largest satellite broadcaster, Tata Sky, for some time. The company has so far attempted to do so indirectly via its subsidiary Star India. Star had been seeking to buy a 49% stake in TS Investments, an investment unit of the Tata Group, which would then buy a 20% stake in Tata Sky for around US$70m. If the ministry backs TRAI’s proposals, News Corp could directly up its stake in Tata Sky without the rigmarole.
According to Media Partners Asia Report 2009, there are about 500 million TV viewers and 129 million TV households in India, with the total number of cable and satellite households growing at a rate of 10%, from 86 million to 95 million, in the past year alone. The number of DTH subscribers has increase from 11.1 million in December 2008 to 19.2 million in December 2009 and 21.3 million in March 2010.
