Cabinet paves way for 100% FDI in DTH services; licences for 20 years

The Union Cabinet on Wednesday approved changes to the guidelines for providing Direct to Home (DTH) services to bring it in line with the existing policy that allows 100 per cent FDI in the DTH broadcasting services sector.

It also said that licences will now be issued for 20 years with a renewal provision after every 10 years. At present, DTH licences are issued for 10 years.

The licence fee has also been lowered from 10 per cent of gross revenue to 8 per cent. The fee will have to be paid quarterly instead of annual payment as at present.

"The licence fee will be similar to that in the telecom sector," Information and Broadcasting Minister Prakash Javadekar told reporters after the meeting.

Leading DTH players welcomed the decision and said a 20-year licence period will provide stability and will be beneficial for players due to the large capital investments that they have made. It also gives DTH the recognition of being an infrastructure intensive sector. While saying that this will resolve the long-standing impasse on the DTH licence policy, Tata Sky's managing director and CEO Harit Nagpal said the industry is looking at a level-playing field with the parity of licence fee with cable TV.

Some sections of the industry was unhappy with the extent of the licence fee cut. The government had earlier said that the licence fee for DTH operators will be charged at 6 per cent of the gross revenue. However, the Trai recommended that the licence fee payable should be 8 per cent, which will be calculated by excluding service tax, entertainment tax and sales tax /VAT actually paid to the government.

According to a Trai report, the DTH industry has an active subscriber base of 72.44 million paying customers in the quarter ended March 31. This was in addition to free DTH services of public broadcaster Doordarshan. Tata Sky with a share of 32.33 per cent was leading in the segment, followed by DishTV with 29.49 per cent. Bharti Telemedia (23.65 per cent) and Sun Direct TV (14.53 per cent).

The commerce and industry ministry had earlier provided for 100 per cent FDI in DTH. But, due to I&B guidelines, it was restricted to 49 per cent. After today's decision, 100 per cent FDI can come in the sector, the minister said.

The cap of 49 per cent FDI in the existing DTH guidelines will be aligned with the policy on FDI as amended from time to time, according to an official statement.

The decision was taken after discussions with TRAI (Telecom Regulatory Authority of India) on removing existing anomalies and will help bring about a level playing field, the minister added.

The release also added that DTH operators will be permitted to operate to a maximum of 5 per cent of its total channel carrying capacity as permitted to platform channels.

A one-time non-refundable registration fee of ₹10,000 per PS channel shall be charged from a DTH operator,” the statement said.

The amended DTH guidelines, the government said, with longer licence period and clarity on renewals, relaxed FDI limits, etc, will ensure a fair degree of stability and new investments with employment opportunities.