New Delhi: Hinduja Group, the promoter of IndusInd Media and Communications Ltd (IMCL), has invested Rs.300 crore in its cable distribution arm to expand its digital base, improve customer services and consolidate the firm’s position in Phase I and II of digitization, as uncertainty over rules holds back foreign investments in the sector.
Grant Investrade Ltd (GIL), a wholly owned subsidiary of Hinduja Ventures Ltd (HVL), has invested Rs.300 crore in IMCL, which operates INCableNet and INDigital in India.
“The promoter group has decided to help IndusInd Media and Communications to help consolidate its position in Phase I and Phase II of digitization and to further grow in Phase III and IV both organically and inorganically in interesting geographies because in Phase III and IV the role of the MSOs is limited to 20-25%. Therefore, about 5,000 independent cable operators would need support in joint ventures or to be bought out,” said Ashok Mansukhani, director, IMCL.
Mansukhani added that the foreign direct investment (FDI) route for the cable distribution sector needs more clarity. “There is uncertainty about foreign investment in the sector as the ministry of information and broadcasting and Trai (Telecom Regulatory Authority of India) have recommended 100% FDI. However, the home ministry has some reservations over the same,” he said.
In August, Trai proposed increasing FDI in distribution and carriage services such as direct-to-home television and cable networks to 100% from the existing 74%.
In September, global investment bank Goldman Sachs acquired about an 18% stake in cable distribution firm DEN Networks Ltd by investing around $110 million.
According to analysts, the lack of clarity in FDI is holding back investments into this sector. “A lot more money can come into the sector if there is clarity in regulatory control. These investments are encouraging. However, there is a huge potential in the sector which can be unlocked if there is clarity in regulation and policy for the sector,” said Smita Jha, leader, entertainment and media practice, PricewaterhouseCoopers India, a consultancy.
Television viewing in India is shifting from analogue to digital platforms. The Union government has mandated cable TV to be digitized in a phased manner across the country by 31 December 2014. The first phase of digitization of television signals has been implemented in Kolkata, New Delhi and Mumbai, while Chennai is still holding out.
The Indian cable TV industry’s total subscription revenue is estimated to grow from $4.2 billion (around Rs.22,386 crore today) in 2011 to $6.4 billion by 2020, with broadband contributing 15% of sales by 2020 versus 85% for pay TV, according to Media Partners Asia Ltd, a Hong Kong-based independent provider of information services.