Govt may suspend Bharti's DTH licence  ( July '21,2008, Business Standard)

The DTH licence of Delhi-based Bharti group's direct-to-home (DTH) broadcasting company — Bharti Telemedia — may be suspended by the government for non-compliance with the foreign direct investment (FDI) norms and breaking the cross-media ownership regulations.

This follows the show-cause notice that was issued to the company last month by the Ministry of Informaton and Broadcasting (I&B) and the response given by the company.

According to highly placed sources, the letter of suspension of Bharti's DTH licence has been moved within the I&B ministry because it is not satisfied with the response sent by Bharti Telemedia. The suspension of DTH licence letter is also awaiting an approval from I&B Minister Priyaranjan Dasmunsi, who has not been in good health for the last few weeks, sources said. "The letter of suspension of Bharti's DTH licence has been prepared and moved to the secretary's office.

It remains to be seen if it will be issued before or after the trust vote on July 22," a highly placed source familiar with the development said.

Senior officials in the I&B ministry say Bharti Telemedia has to go to the Foreign Investment Promotion Board (FIPB) as it has a significant percentage of foreign investments in the company through one of the promoting companies. "Once the company obtains the mandatory approval of the FIPB, its DTH licence will be restored," an official in the I&B ministry said.

Bharti Telemedia has two investing companies — Bharti Airtel (which holds 40 per cent) and Bharti Enterprises (60 per cent). Bharti Airtel, however, has a foreign holding of 21.64 per cent. The ministry said the DTH licensing rules state indirect foreign investment through investment companies has to be calculated on a pro-rata basis and such an investment would also require the FIPB approval.

Bharti Telemedia has already soft-launched its DTH services in various parts of the country and plans a commercial launch in a month.

Last month, the I&B ministry, in its notice to Bharti Telemedia, had also pointed out that Bharti Airtel is registered as a cable operator. But the DTH licensing norms clearly specify that any DTH licence-holder will not allow broadcasting companies or cable network companies to collectively hold or own more than 20 per cent in the DTH company anytime during the licence period. But Bharti Airtel holds 40 per cent in Bharti Telemedia, the DTH licence holding company of the group.

In response, a Bharti spokesperson, in a written reply to Business Standard, had said: "We are in complete compliance of all necessary regulatory guidelines including FDI and the foreign equity component as laid down in DTH licence conditions and requirements.

All these particulars were duly submitted to the ministry of information and broadcasting and licence was granted by the ministry after consideration of all the details."

The guidelines for DTH services state, of the 49 per cent permissible foreign holdings allowed in any DTH company, the FDI component should be under 20 per cent. The remaining foreign investment can take the form of NRIs, overseas corporate bodies and foreign institutional investors, among others. FIPB clearance is mandatory for any FDI investment.

Bharti's DTH services are among the handful of new operators, including BIG TV (the DTH arm of Reliance ADAG) and Videocon. All the new entrants are expected to launch in the next four months.

The DTH market is pegged at over 6 million subscribers. Essel Group's Dish TV and Tata Sky, the joint venture between Tata Sons and Star TV, are the leading DTH operators. Sun Direct from Sun TV Network is the third DTH operator, mainly present in the southern states.