Govt asks Bharti Telemedia to seek FIPB nod for DTH
31 Aug, 2008
NEW DELHI: Government has asked Sunil Mittal's Bharti group to seek a separate FIPB approval within three months for its upcoming Direct-To-Home services. "The DTH licensee Bharti Telemedia is ordered to seek separate FIPB approval within three months from the date of issue of this order," a directive issued by Information and Broadcasting Ministry on Aug 25 said.
When contacted, a Bharti spokesperson said: "The requirement of a separate FIPB approval is a procedural matter and we will submit all necessary details as required". "We have all required approvals in place and are in complete compliance of all regulatory guidelines, including FDI and the foreign equity as applicable," he added.
The I&B order follows replies by the company to its earlier show-cause notice over alleged 'violation' of FDI and other guidelines. As per existing guidelines, any foreign investment in cable and boadcasting company requires FIPB approval. The bone of contention was Bharti Airtel, the group's mobile telephony arm holding 40 per cent stake in Bharti Telemedia, as well as having a cable operator's licence, owning over the permitted stake in the DTH arm.
"Bharti Airtel, which has a 40 per cent share in the DTH licensee company, is registered as a cable operator. The eligibility condition for DTH license provides that the licensee shall not allow broadcasting and/or cable network companies to collective hold or own more than 20 per cent of the total paid up equity in the DTH venture," the notice had said.
This particular cross-holding issue has now been resolved with Bharti Airtel surrendering its cable opeartor licence. "Since the investing company Bharti Airtel has surrendered the registration as cable operator, the violation has ceased to exist", the order said.
It, however, added "Bharti Telemedia is warned for future and directed to ensure strict compliance of terms and conditions of licence." The I&B ministry's earlier notice had said it had found that Bharti Telemedia did not have FIPB approval for foreign investment coming into it on a pro-rata basis through investing firms, which resulted in violation of existing FDI policy and in turn the eligibility criteria of the guideline.
With respect to the FDI in the DTH arm, the ministry had found it to be well above the permitted limit and asked the company to clarify on the shareholding of Bharti Enterprises, which holds 60 per cent in Bharti Telemedia. "On further examination, it has been found that in case of Bharti Enterprises it is a partnership firm of seven individuals but it is not clear whether these individuals are Indians, NRI or foreigners. Therefore, this may be clarified urgently," it said.
The shareholding pattern of another company Bharti Airtel, which has 40 per cent stake in the DTH arm, shows a total foreign investment of 21.6 per cent in the form of FDI. The eligibility criteria in respect of a foreign investment in a DTH company is that the FDI component of the foreign equity should not exceed 20 per cent. The total foreign equity holding, including FDI/NRI/OCBs/FIIs in the applicant cannot exceed 49 per cent.
Govt asks Bharti Telemedia to seek FIPB nod for DTH- Media-Media / Entertainment -News By Industry-News-The Economic Times
31 Aug, 2008
NEW DELHI: Government has asked Sunil Mittal's Bharti group to seek a separate FIPB approval within three months for its upcoming Direct-To-Home services. "The DTH licensee Bharti Telemedia is ordered to seek separate FIPB approval within three months from the date of issue of this order," a directive issued by Information and Broadcasting Ministry on Aug 25 said.
When contacted, a Bharti spokesperson said: "The requirement of a separate FIPB approval is a procedural matter and we will submit all necessary details as required". "We have all required approvals in place and are in complete compliance of all regulatory guidelines, including FDI and the foreign equity as applicable," he added.
The I&B order follows replies by the company to its earlier show-cause notice over alleged 'violation' of FDI and other guidelines. As per existing guidelines, any foreign investment in cable and boadcasting company requires FIPB approval. The bone of contention was Bharti Airtel, the group's mobile telephony arm holding 40 per cent stake in Bharti Telemedia, as well as having a cable operator's licence, owning over the permitted stake in the DTH arm.
"Bharti Airtel, which has a 40 per cent share in the DTH licensee company, is registered as a cable operator. The eligibility condition for DTH license provides that the licensee shall not allow broadcasting and/or cable network companies to collective hold or own more than 20 per cent of the total paid up equity in the DTH venture," the notice had said.
This particular cross-holding issue has now been resolved with Bharti Airtel surrendering its cable opeartor licence. "Since the investing company Bharti Airtel has surrendered the registration as cable operator, the violation has ceased to exist", the order said.
It, however, added "Bharti Telemedia is warned for future and directed to ensure strict compliance of terms and conditions of licence." The I&B ministry's earlier notice had said it had found that Bharti Telemedia did not have FIPB approval for foreign investment coming into it on a pro-rata basis through investing firms, which resulted in violation of existing FDI policy and in turn the eligibility criteria of the guideline.
With respect to the FDI in the DTH arm, the ministry had found it to be well above the permitted limit and asked the company to clarify on the shareholding of Bharti Enterprises, which holds 60 per cent in Bharti Telemedia. "On further examination, it has been found that in case of Bharti Enterprises it is a partnership firm of seven individuals but it is not clear whether these individuals are Indians, NRI or foreigners. Therefore, this may be clarified urgently," it said.
The shareholding pattern of another company Bharti Airtel, which has 40 per cent stake in the DTH arm, shows a total foreign investment of 21.6 per cent in the form of FDI. The eligibility criteria in respect of a foreign investment in a DTH company is that the FDI component of the foreign equity should not exceed 20 per cent. The total foreign equity holding, including FDI/NRI/OCBs/FIIs in the applicant cannot exceed 49 per cent.
Govt asks Bharti Telemedia to seek FIPB nod for DTH- Media-Media / Entertainment -News By Industry-News-The Economic Times