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DTH licensing policy change detrimental, raises liability risk: Crisil

The new licensing guidelines could significantly increase the potential liabilities of incumbents when renewing their licences, it said

Topics
DTH operators | Crisil | DTH players

Press Trust of India  |  Mumbai 

DTH
Photo: iStock

Top four direct-to-home (DTH) operators are staring at a payout of up to Rs 8,000 crore to the government to renew their licences following a recent policy change, a ratings agency said on Wednesday.

Ratings said the December 30, 2020 policy change by the Ministry of Information and Broadcasting (MIB) "materially raises" liability risk for all the

The new licensing guidelines could significantly increase the potential liabilities of incumbents when renewing their licences, it said.

The guidelines say renewals will be subject to broadcasters clearing all their dues and fulfilling all obligations under the terms and conditions of their extant licence, and also those arising out of legal cases pending before various courts, it explained.

"The dues demanded from top four is Rs 7,700-8,000 crore, while their Ebitda (earnings before interest, taxes, depreciation) for the current fiscal is estimated at Rs 7,000-7,500 crore," the agency said.

The matter has been discussed at various legal forums over the past decade and continues to be sub judice, it said.

Clarity with respect to the final dues, timelines for payment and the debt-equity funding mix to pay up the liability will be crucial to ascertain the cash-flow impact for the DTH operators, it said.

The rating agency said supported by strong sponsors will be able to sustain their credit profiles notwithstanding the expected potential liability and added that credit profiles of such companies are also supported by healthy cash accrual, strong balance sheets and high financial flexibility.

The agency said it will continue to monitor the developments on this and take appropriate action as and when required.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)


(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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First Published: Wed, January 06 2021. 21:11 IST
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