Star seeks FIPB nod again to up stake in Tata Sky

MUMBAI: Star India has once again filed for FIPB (Foreign Investment Promotion Board) clearance to up its stake in Tata Sky, after making modifications in its application.

"Star has resubmitted the proposeal to increase its stake in the DTH company," Tata Sky MD and CEO Vikram Kaushik said, while declining to elaborate further.

The modifications could be regarding certain associated rights but has nothing to do with the original stake acquisition proposal.

"Star intends to effectively hike its stake in Tata Sky from 20 per cent to 29.8 per cent. There is no change in that in the fresh application made by Star," a source familiar with the development said.

The amount of Rs 3.24 billion that would flow in as part of the transaction also stays unchanged, the source added.

Star, the Indian subsidiary of Rupert Murdoch’s News Corp, had proposed to up its effective stake in February this year. However, the FIPB had deferred the proposal following which the company had withdrawn its application.

As per the plan, Star India will buy a 49 per cent stake in Tata Group’s investment firm TS Investments.TS Investments will, in turn, buy a 20 per cent stake in Tata Sky for Rs 3.24 billion. This will give effectively an additional 9.8 per cent stake to Star India in Tata Sky, increasing News Corp’s total holding in the DTH company to 29.8 per cent.

At present, there is a cap of 20 per cent FDI in the DTH sector, while the ceiling on foreign holding is 49 per cent. However, the government made amendments to the FDI policy last year that stated that investment through companies owned and controlled by Indians would not count in the calculation of foreign investment.

The Tata Group holds 70 per cent in Tata Sky and 10 per cent is with Temasek. If the Star proposal sails through, the Tatas will get diluted to that extent.

Tata Sky, which is incurring losses, requires funding to further ramp up its subscriber base. The DTH company has already pocketed over five million subscribers, but trails behind market leader Dish TV (seven million) and Sun Direct (5.3 million).

Meanwhile, Tata Sky has launched three new features on its premium PVR (personal video recorder) offering, Tata Sky+.

The features include True Video-on-Demand (TVoD) service, dual access remote recording and auto standby technology to save electricity. All three value addition features will be available to existing as well as new subscribers of Tata Sky+.
“We are continuously trying to give more value added services and quality of service to our subscriber. We were working on these initiatives since over a year,” said Kaushik.

Though he did not disclose the amount, Kaushik asserted that a significant investment has been made towards development of this technology.

The TVoD service will help users to sample 45 hours of content, which will be updated on a regular basis, as per their convenience. This will include programmes, movies and documentaries with different genres like travel, comedy, drama and food and drinks.

Unlike other pay-per-view (PPV) and video-on-demand (VoD) services offered by other DTH players, Kaushik said that TVoD will not have any time constraint. The data will be pushed by Tata Sky to the PVR set-top-box (STB) hard disk directly.

“Based on the consumer feedback, the data will be updated,” Kaushik added.

The already downloaded content can be viewed anytime and the service is free for three months. However, Tata Sky is yet to finalise the way to charge for the service. 
“We are not looking at the TVoD service from revenue point of view at this level, at least for one year,” Kaushik added.

Among the other new features, the dual access remote recording service will be available by the end of this month. With this free of cost service, Tata Sky+ subscribers can use their mobile phones or internet to activate their PVR STB and record the programme.

Meanwhile, the auto standby technology will put the Tata Sky+ STB in sleep mode, whenever it is not is use, saving the electricity.

Tata Sky+, available for Rs 5,499, claims over 100,000 subscribers at present. The DTH operator hopes to have 10 per cent of its new subscribers opting for Tata Sky+.

Tata Sky claims to have almost two million subscribers using its value added services. Moreover, quoting internal research data, Kaushik said Tata Sky subscribers spend 180 minutes on TV everyday, out of which 34 minutes are spent on interactive services.

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