Our Bureau

New Delhi, May 17

THE direct-to-home (DTH) broadcasting segment is set to witness some action with the Government clearing applications of Space TV (a joint venture between the Tata group and Star group) and Mr Kalanidhi Maran's Sun Direct Pvt Ltd.

Mr S.K. Arora, who took over as the Secretary, Information and Broadcasting (I&B) Ministry, said, "We will be issuing the letter of intent (LoI) soon. The applications conform to the stipulated guidelines." Later in the day, Space TV sources said they had been issued the letter of intent.

The Space TV application has been mired in controversy with the Ministry of Company Affairs raising objections to the shareholding agreement and the management structure of the joint venture. The company has since modified the agreement to adhere to the DTH guidelines. Sun TV's proposal had a smoother sail.

With the inclusion of Sun TV and Space TV, there will be four players in the DTH segment. The Subhash Chandra-promoted Dish TV and Prasar Bharati's free DTH service - DD Direct - have begun operations.

However, even after the LoI is issued, the two companies would be granted a licence only after depositing bank guarantees of Rs 10 crore.

While Space TV has envisaged an investment of Rs 1,600 crore for its DTH business, Sun Network's venture will have a paid-up capital of Rs 50 crore. While Mr Maran will hold 96.67 per cent equity, his wife, Ms Kaveri Maran, will hold the remaining 3.33 per cent.

The Government has set stringent entry norms for DTH operators. It stipulates that the applicant company should be registered under the Indian Company's Act, 1956, while its total foreign equity holding should not exceed 49 per cent, of which not more than 20 per cent should be the FDI component. It also says the applicant company must have Indian management control, with majority representatives on the board, and the company's CEO must be a resident Indian.

(This article was published in the Business Line print edition dated May 18, 2005)
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