New Delhi: The Competition Commission of India (CCI) has asked the Telecom Regulatory Authority of India (Trai) to weigh in on whether the merger of direct-to-home (DTH) firms Dish TV India Ltd and Videocon d2h Ltd will violate any anti-trust laws, three people familiar with the development said.
The Zee Entertainment Enterprises Ltd-owned DTH platform Dish TV and the DTH arm of Videocon Industries Ltd had announced their merger in November 2016. The new entity is to be renamed as Dish TV Videocon Ltd.
Dish TV will own 55% and Videocon 45% stake in the new company which will have a 45% share of the market.
A Trai official confirmed that CCI has asked the regulator for its view.
“CCI has reached out to us. We are still evaluating the case and haven’t reached a decision. We will respond to the request in a few days,” added this person who asked not to be identified.
Spokespeople for Dish and Videocon were not available to comment.
India has six private DTH firms—Dish TV, Reliance BIG TV Ltd, Tata Sky Ltd, Videocon d2h Ltd, Sun Direct TV Pvt. Ltd and Bharti Telemedia Ltd. State broadcaster Doordarshan also runs a DTH platform for free-to-air channels called DD Free Dish.
Dish TV is the market leader with a 25% share, followed by Tata Sky with a 23% market share, according to data from Trai. Videocon d2h and Bharti Telemedia have 20% market share each.
Together, Dish TV and Videocon d2h will serve 27.6 million customers (data as of 30 September), “out of a total of 175 million TV households highlighting significant room for growth”, the companies had said in a BSE filing at the time of the merger.
“The proposed transaction is expected to create a leading cable and satellite distribution platform in India. The combined entity would have a revenue of Rs5,915.8 crore for the fiscal year ended 31 March 2016, positioning it as a leading media company in India,” they added.
A CCI official who did not wish to be identified confirmed that the commission is looking into “whether the merger will violate anti-trust laws”. “TRAI has been consulted for an opinion on where the players stand in the market,” the official added.
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As per the Competition Commission of India Act, 2002, the regulator can seek opinions of other authorities. CCI is expecting a reply within 60 days.
An expert said consolidation is long overdue in the DTH business. “The dominant position of a company cannot be for long because one consolidation will not be enough for the industry” said Ashesh Jani, partner, Deloitte Haskins and Sells. Even if a merger creates a market leader, he explained, it will only be till the next merger.
According to a 2013 report on the Indian DTH market by Hong Kong-based research firm Media Partners Asia, revenues in the DTH industry are expected to touch $3.9 billion by 2017 and $5.3 billion by 2020, up from $1.5 billion in 2012.