FDI limit set to hike in cable industry: Sharekhan

25834 Investors following Dish TV India. Share this News with them.

0

Like this story, share it with millions of investors on M3

FDI limit set to hike in cable industry: Sharekhan

Sharekhan has come out with its report on media space. The research firm remains selectively biased toward Dish TV.

Post your opinion here

 

0

Tweet

Share on Tumblr

RELATED NEWS Buy MRPL, accumulate Chennai Petroleum: PINC Research Buy Sun TV Network; target Rs 306: IIFL Buy Allahabad Bank; target Rs 260: Sushil Finance

Sharekhan has come out with its report on media space. The research firm remains selectively biased toward Dish TV .

Hike in FDI limit in cable: After making digitisation of cable TV across the country compulsory by December 31, 2014, the government is set to increase the foreign direct investment (FDI) limit in the sector from 49% to 74%. The Telecom Regulatory Authority of India (TRAI)'s recommendation to increase the FDI limit from 49% to 74% for direct-to-home (DTH) TV, Internet Protocol TV (IPTV) and teleport has been validated by the information & broadcasting (I&B) ministry.

Currently FDI is allowed up to 74% in mobile TV, HITS and IPTV whereas the permissible foreign investment cap for cable distribution companies is 49%. The move will make the distribution of FDI uniform across platforms including DTH, IPTV, mobile TV, HITS and cable companies. However, the FDI ceiling for local cable operators will remain 49 % (it has been so since 1995) as the recommendation to reduce it to 26% by TRAI has been rejected by the I&B ministry.

According to industry estimates, the total fund requirement for the DTH and cable industry will be close to Rs250-300 billion for the successful implementation of digitisation. Thus, an increase in the FDI limits will make the funding easier for the companies in an environment of high interest cost coupled. Besides, most companies already have high debts on their books.

View: We view this development as a welcome breather for the Indian cable distribution sector, which is reeling under high debts and negative cash flows. As the cable industry is gearing up for the compulsory digitisation mandate, it has become important for the companies to equip themselves with funds to create the necessary infrastructure. The possible increase in the FDI limit to 74% will help the companies to garner funds without creating further pressure on the balance sheets. We remain positive on the DTH space from a longer-term perspective. However, we remain selectively biased toward Dish TV.

Public holding more than 90% in Indian cos

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment