Attorney General approves Tata Sky equity changes

Omega TC Holdings and Tata Capital will be the new shareholders in Tata Sky as the Attorney-General of India has given his approval to the new equity structure of the DTH company.

Post the deal, Tata Sons’ share in the company is expected to come down by about three per cent.

Tata Sky is a joint venture between the Tata Group and Rupert Murdoch’s STAR. Currently, Tata Sons owns 60 per cent, while STAR owns a 30 per cent stake.

Both Omega TC Holdings and Tata Capital are Tata Group companies.

The proposal was sent to the Attorney-General, Goolam Vahanvati for legal opinion to check if the revised structure would change management control. Under the DTH guidelines, companies are supposed to have Indian management control with majority representatives on the board as well as the CEO being a resident Indian.

“I am of the view that the clauses referred to do not amount to conferment of control on Omega… If the investor voluntarily or involuntarily reduces his shareholding below 3.5 per cent then the fundamental issue clause would not apply,” Attorney-General, Goolam Vahanvati, said in his opinion sent to the Government.

Vahanvati was asked to comment on four questions including one on whether the proposal from Tata Sky was in compliance of the guidelines on direct and indirect control with respect to the foreign investments.

DTH Industry is going through a tremendous change as cable TV mandatory digitisation has added to the competition. Already beleaguered DTH operators are finding it tough to run their business due to low ARPUs. They did get substantial gains in connectivity when digital cable faced teething troubles in the last one year but now growing competition is taking its toll.  While Bharti Airtel is looking to divest 20-25 per cent stake to private equity players, Reliance’s Big TV is understood to be in talks with Sun Direct for a merger.

Source: http://cablequest.org/news/dth-news/item/2862-attorney-general-approves-tata-sky-equity-changes.htmlSource: http://cablequest.org/news/dth-news/item/2862-attorney-general-approves-tata-sky-equity-changes.html