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29% stake in Space TV on offer to FIIs

29% stake in Space TV on offer to FIIs

Author | exchange4media News Service | Wednesday, Mar 24,2004 6:03 AM

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29% stake in Space TV on offer to FIIs

Space TV, the direct-to-home (DTH) television joint venture between the Tata group and Rupert Murdoch’s News Corp, is likely to divest up to 29 per cent equity in the company to foreign institutional investors (FIIs) in due course.

The company’s proposal with the government says the equity will be diluted by the Tata group, whose holding in the company will come down to 51 per cent from the present 80 per cent. News Corp’s holding in the company will remain at 20 per cent.

News Corp’s investment in Space TV will be through the company’s wholly owned Dubai-based subsidiary, Network Digital Distribution Services, which plans to acquire the holding in Space TV in two tranches.

First, it will acquire a 20 per cent stake from C Jagdish Kumar and Ajay Sinha, former Space TV directors. Next, fresh investment in the equity share capital of Space TV, along with the Tata group, will raise Network Digital’s stake to an overall 20 per cent.

The Indian holding in the company will be through Tata group companies, including Tata Sons. In the event of a delay in getting FII funds into the company, Space TV will fund a part of its investment by loans from the promoters of the company.

Of the total projected cost of around Rs 1,600 crore for the DTH venture, the initial foreign equity investment by Network Digital is estimated to be around Rs 201.45 crore (about $44.03 million).

The investment will go towards putting up the infrastructure, laying out a distribution network and entering into marketing tie-ups.

The company is expected to offer 65 channels to begin with besides niche channels like lifestyle, cookery and gardening. The monthly bill for the service will range between Rs 160 and Rs 300.

In the first year of operation the company is expecting about 1 million subscribers and expects the number to go up to 10 million in the next eight years.

Space TV also expects that once the number of subscribers picks up, some Indian companies may come forward to manufacture set-top boxes locally.

Tags: e4m

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