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Sep 18, 2012, 07.20 PM | Source: CNBC-TV18

Phase I funding taken care of by most players: Hathway

G Subramaniam, chief financial officer, Hathway told CNBC-TV18 that relaxation of FDI norms will be of more benefit to media companies in the second phase of digitization than in phase one.

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Phase I funding taken care of by most players: Hathway

G Subramaniam, chief financial officer, Hathway told CNBC-TV18 that relaxation of FDI norms will be of more benefit to media companies in the second phase of digitization than in phase one.

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CFO, Hathway |

The government raised the FDI cap in broadcasting from 49% to 74% last week. G Subramaniam, chief financial officer, Hathway told CNBC-TV18 that relaxation of FDI norms will be of more benefit to media companies in the second phase of digitization than in phase one.

Meanwhile, the October 31 deadline for completion of first phase of digitisation of the Cable TV in the four metros of Delhi, Mumbai, Kolkata and Chennai is just a couple of weeks away. 

As per the latest data released by the Information and Broadcasting Ministry, 68% digitisation of the Cable TV households has been completed in these four metros. According to Subramaniam, most players in the industry are adequately funded to achieve the first phase.

Below is the edited transcript of Subramaniam’s interview with CNBC-TV18.

Q: How much do you think this will show a practical benefit because an analyst said that there is no real interest which has come in and there are lot of companies which are not even looking to pare off majority stake to any foreign player in the digital space?

A: The benefit from this relaxation in FDI norms will flow through to the industry more in the second phase of mandatory digitization than in the first phase. The first phase is just around 40 days away, so it will be presumptuous to assume that capital is going to flow in between now and then.

But in the second phase, there is a significant amount of capital that is going to be required by the cable industry. I am sure after the international players have seen hopefully, the success of phase one rollout, they would get more and more excited and interested in this space.

International players will look to consolidate this business as they come in and that is bit of a way out. Therefore when you spoke to analysts and they were skeptical, I wouldn’t say they were skeptical, but they were probably saying that it will come a bit later rather than immediately and the benefit will be felt in a long run not immediately.

Q: We should understand that providence is not immediately interested in putting money but they would do so after watching phase one?

A: No, I do not think you should understand anything like that because Providence has put in capital has acquired the stake from Star who were our erstwhile investors. If there is a need for additional capital, I am very sure both the existing promoters and providence would step in as necessary. So I do not think there is any lack of interest.

Q: There is quite a bit to catch up in the next forty days, it is only Mumbai that seems to be somewhere near the digitization deadline, the others are pretty way off barely 50% in some of the bigger cities, how will the process pan out if the entire digitization is not completed by October 31?

A: The pace was very good up to June and when the government announced the delay in by about four months to October 31, obviously the pace slackened. We are fairly optimistic that the pace will pick up from now on. It is not going to be a huge challenge to complete the digitization particularly in the series of Mumbai, Delhi and Kolkata.

If you look at the numbers what the government has put out yesterday, while I will not go by the accuracy of those percentages but the percentages are fairly substantial as far as Mumbai is concerned. Delhi has some way to catch up, but we are at this point of time fairly confident that Delhi will also do that in the course of the next six weeks or so.

More pertinently as far as Hathway is concerned, our Mumbai universe is substantially digitized. We are fully stocked up and ready to rollout digitization as of October 31.

We have no issues as far as inventory of set top boxes are concerned. We are comfortable with the notion that cable operators will also see the deadline looming nearer and nearer and they will be able to put those boxes out into the market in time.

Q: What do you do on that day you snap the non-digitized connections?

A: That is seemingly the position at this point that we will all have to discontinue our analog signals and we will be able to only provide digital signals thereafter.

Q: Say a Comcast wants to enter the market at this point in time, what is the capital requirement for the digitized companies or digitization companies such as yours? How urgent is the capital required and three what would be the advantage of a Comcast or a foreign player coming into the Indian market with controlling stake?

A: As far as the capital requirement for the industry as a whole is concerned, I would assume that it will be in the region of about Rs 25,000-30,000 crore. This is not just in set top boxes, the subsidy on the set top boxes, but all the other things which go around rolling out digital networks. Therefore, the availability of that capita is certainly very important.

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