Dec 15, 2008

Business - India;Cable industry protests govt moves to relax FI only for DTH

Ashish Sinha

The cable industry, which reaches over 80 million out of India’s 130 million TV-owning homes, is getting ready to strongly oppose the government’s move to raise the foreign direct investment (FDI) limit for direct-to-home (DTH) service providers from 49 to 74 per cent without doing the same for cable companies.

The ministry of information and broadcasting (I&B) has started the proceedings to this effect and a detailed cabinet note is likely to be prepared next week.

FDI for DTH and cable players is currently capped at 20 per cent within the overall 49 per cent limit.

Foreign institutional investors (FIIs), non-resident Indians (NRIs), persons of Indian origin (PIOs) and overseas corporate bodies (OCBs) can account for the remaining 29 per cent.

Sources said the government may now re-work the formula for DTH players only by raising the overall cap to 74 per cent and the FDI component from 20 to 49 per cent.

Government sources said cable companies will be excluded from this relaxation because of “security concerns”.

“The cable sector reaches the maximum number of homes in the country and is considered highly influential in moulding public opinion,” a government source explained.

DTH, on the other hand, has made inroads in only about 10 million homes,” the source added.

The move follows a recent recommendation from sector regulator Telecom Regulatory Authority of India (Trai) to raise the FDI limit for delivery platforms like DTH, IPTV, Headend-In-the-Sky and cable and mobile TV from 49 to 74 per cent.

The cable industry said it will oppose the I&B ministry’s move because it will be at the cost of digital cable. “It will derail the digitalisation of the cable delivery system and will ultimately kill the cable industry in which huge investments have been made,” said Ashok Mansukhani, president, Multi-System Operators Alliance, the apex body of organised cable companies, which reaches over 65 per cent of cable homes.

Industry estimates put the number of digital cable homes at 7 million.

“We will write to the Prime Ministers Office and to the government if it actually raises the FDI cap for DTH without doing so for the cable sector,” Mansukhani said.

Neither DTH nor cable companies so far have used their foreign investment limits, so experts said any increase in the overall FDI limit will not open doors for foreign investments at one go.

“The move may benefit the telecom firms — Reliance ADAG and Bharti Airtel —who have entered DTH operations now and are gearing to launch their IPTV ventures as well, said a Delhi-based independent media consultant.

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