The government has asked Sunil Mittal’s Bharti group to seek a separate FIPB approval within three months for its upcoming Direct-To-Home (DTH) services, in a directive issued by the Information and Broadcasting Ministry on August 25.
When contacted, a Bharti spokesperson said: “The requirement of a separate FIPB approval is a procedural matter and we will submit all necessary details as required.”
“We have all the required approvals in place and they are in complete compliance of all regulatory guidelines, including FDI and the foreign equity as applicable,” he added.
The I&B order follows clarifications by the company to its earlier show-cause notice over alleged ‘violation’ of FDI and other guidelines.
According to existing guidelines, any foreign investment in a cable and broadcasting company requires FIPB approval.
The bone of contention was Bharti Airtel owning over the permitted stake in the DTH arm. Bharti Airtel, which has a cable operator’s licence, is the group’s mobile telephony arm holding 40 per cent stake in Bharti Telemedia.
“Bharti Airtel, which has a 40 per cent share in the DTH licensee company, is registered as a cable operator. The eligibility condition for DTH licence provides is that the licensee shall not allow broadcasting and/or cable network companies to collectively hold or own more than 20 per cent of the total paid up equity in a DTH venture,” the notice said. This particular cross-holding issue has now been resolved with Bharti Airtel surrendering its cable operator licence. “Since the investing firm Bharti Airtel has surrendered the registration as cable operator, the violation has ceased to exist”, the order said.
It, however, added that “Bharti Telemedia is warned for future and directed to ensure strict compliance of terms and conditions of licence.”
The I&B ministry’s earlier notice had said it had found that Bharti Telemedia did not have FIPB approval for foreign investment coming into it on a pro-rata basis through investing firms, which resulted in violation of existing FDI policy and, in turn, the eligibility criteria of the guideline.
With respect to FDI in the DTH arm, the ministry found it to be well above the permitted limit and asked the company to clarify on the shareholding of Bharti Enterprises, which holds 60 per cent in Bharti Telemedia.
“On further examination, it has been found that in case of Bharti Enterprises, it is a partnership firm of seven individuals but it is not clear whether these individuals are Indians, NRI or foreigners. Therefore, this may be clarified urgently,” it said.
The shareholding pattern of Bharti Airtel shows a total foreign investment of 21.6 per cent in the form of FDI.
