Broadbandindia Magazine

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

Foreign institutional investors (FIIs), nonresident Indians (NRIs), persons of Indian origin (PIOs) and overseas corporate bodies (OCBs) can account for the remaining 29%. Sources said the government may now re-work the formula for DTH players only by raising the overall cap to 74% and the FDI component from 20 to 49%.

Govt. cites `security concerns’ for Cable’s exclusion

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-Inthe- Sky and cable and mobile TV from 49 to 74%.

Digital Cable will get effected

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% 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.

All are not unhappy

Although a section of the cable industry is unhappy with the TRAI recommendation, Roop Sharma, President, Cable Operators Association of India has a different take on it. He said, “The cable industry does not want more than 49% of the FDI, however, the fact remains that the growth in the cable industry will remain good even in 2009 despite the competition from DTH players, and no matter what, the cable industry is here to stay and give a tough fight to their competitors.

FDI hike not important for DTH

Salil Kapoor, CEO, DishTV was of the opinion that, “Even if the FDI is hiked to 74%, it will not help the industry much as we have Indian promoters and, therefore, FDI has no role to play in it. Whether or not the Government hikes FDI limit, it will be of no difference to us. We are available even in the most remote areas of the country and provide 100% remote coverage, which is not so in cable and being an information industry, Government support is vital. Currently, the industry is based on total subsidy and multiple taxes, which are hurting the industry. Government support should come by way of lowering these multiple taxes, which, in turn, will help in the growth of DTH industry.”

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.