The Cabinet’s nod for the increase in FDI limit to up to 74 per cent in broadcasting carriage services that include Direct to Home (DTH), digital cable networks and teleports besides mobile television will help bring in the much needed investments as the industry is gearing up for digitisation.
While 49 per cent FDI will be allowed through automatic route, Government nod will be required to increase it to 74 per cent in these services.
This decision has been taken keeping in mind the increasing convergence between the broadcasting and telecom sectors as well to bring in uniformity in respect of investments in carriage.
While the four metros need to be digitised before November, the entire country needs to go digital by 2014 and industry estimates suggest investments to the tune of Rs 20,000-25,000 crore are required. DTH sector for instance has been suffering from losses and it takes long time for companies to break even and require investors with deep pockets, believe media analysts.
S.N. Sharma, CEO, DEN Networks Ltd, said, “The cost of digitisation is being borne by Multi System Operators. It is estimated each of the MSOs have already invested Rs 300-400 crore for the first phase of digitisation. The industry requires funds to expand networks and as well for advancement of technology and this move will help raising funds for the future digitisation plans.”
Added Avnindra Mohan, President-Legal and Regulatory Affairs, Essel Group, “This move was long over due. This will help MSOs as well as DTH industry raise funds.”
MSO Alliance President Ashok Mansukhani said given the Government has not given any fiscal incentives for digitisation in the form of relief on taxes, so the increase in FDI limit was a much needed policy nod.
Level-playing field
Media analysts believe this will help create a level playing field between DTH and digital cable companies.
Smita Jha, Leader - Entertainment and Media, PwC India said, “This timely announcement will enable the TV distribution industry meet the deadline of mandatory digitisation as pronounced by the Government. A commendable step is also the uniformity in the increase across sub-sectors of DTH, Cable and HITS in the era of convergence.”