Automatic nod for 49% FDI in DTH

kramkumar

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In a major overhaul of the foreign direct investment (FDI) norms in the content distribution space, the government has put 49% of the foreign investments in the direct-to-home (DTH) sector on the automatic route while increasing the overall cap to 74%.

This means, the six private DTH operators in the country can bring in up to 49% of the foreign investments immediately without requiring the mandatory approval from the Foreign Investment Promotion Board (FIPB), which usually takes around two-three months to process the approvals

Current norms make it mandatory for DTH operators to seek prior government approval, including an FIPB nod, while the overall foreign investment cap stands at 49%, within which the FDI component cannot exceed 20%.

As a result, foreign investors like Malaysian Astro (in Sun Direct) and Star TV (in Tata Sky) had to increase their respective stakes in the DTH firms by investing via the indirect route.

Apart from DTH, the government has also increased the foreign investment cap in IPTV, Mobile TV, HITS and Teleport to 74%. Also, 49% out of the overall 74% foreign investment cap in each of these sectors will be via the automatic mode.

However, for content services like news channels, all foreign investments will require the FIPB nod and there will not be any automatic route. The sector regulator — The Telecom Regulatory Authority of India (Trai) — had earlier batted for bringing all foreign investment up to 26% in the broadcasting sector under the automatic route.

The government has also increased the foreign investment cap for the private FM radio sector from 20% to 26% but with prior government approval.

Trai has now given its nod to a complete revamp of FDI norms in the broadcasting space, as proposed by the information and broadcasting (I&B) ministry. Now the revamped proposal will go before the Cabinet for its approval. "The Cabinet is expected to give its nod within the next few weeks," a senior government official said.

Because of the revamp of FDI caps in DTH, the existing six private DTH operators will not only be able to bring in more foreign investment but also in a transparent manner.

Last year, Malaysian Astro increased its effective stake in Sun Direct to 35% by investing in a Sun Group subsidiary firm, Kal Media Services, which in turn bought into Sun Direct. Similarly, one of Rupert Murdoch's overseas firms bought 49% stake in Tata Group’s investment firm TS Investments last year which in turn bought a 20% stake in Tata Sky for Rs 324 crore. This move gave Star an overall effective stake of around 30% in Tata Sky which is a joint venture between Tata Sons, Star and Singapore-based Temasek Holdings. The only BSE-listed DTH firm, Dish TV has around 12.4% foreign investors, much below the current norms

http://www.financialexpress.com/news/automatic-nod-for-49-fdi-in-dth/799737/0
 
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