Star’s plan to raise Tata Sky stake hits FIPB hurdle

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narshiv

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New Delhi: Star India’s move to increase its overall stake in DTH firm Tata Sky by leveraging the new foreign investment guidelines announced last year has hit Foreign Investment Promotion Board (FIPB) hurdle. The FIPB has deferred the matter at the behest of the information and broadcasting (I&B) ministry, the nodal ministry for the broadcasting sector, sources say.
Last month, Star India had sent a proposal to the FIPB to form a joint venture entity with the Tata group firm in which Star will have 49% stake. Sources say the proposed entity of Star and Tata firm may then pick up 20% stake in direct-to-home (DTH) firm Tata Sky. This in effect will give Star an additional 9.8% stake in Tata Sky. The Star group already holds 20% stake in Tata Sky, the maximum permissible foreign direct investment in the DTH sector.
Once the proposed entity takes shape, Star will be able to significantly scale up its stake in Tata Sky, which like every other private DTH operators, requires funding for expansion.
Senior officials of the I&B ministry want more time to study the Star group’s proposal for any possible change in ownership and control of the proposed entity in favour of Star India that otherwise will be a minority shareholder holding 49% stake while a Tata group firm (TS Investments) will be the majority owner in the proposed entity.
“It is an interesting proposal. We will be studying it closely,” said a senior official in the FIPB. When contacted, a senior official in the I&B ministry said, “We will be studying the proposal with respect to any change in control and ownership of the entity in favour of a minority shareholder.” Star
 
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This is bad news. They should be allowed to raise their stake.
 
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shaile

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Liberal policies for foreign investment will help development of the firm it also contributes to development of the economy.