If the telecom department has its way, FM radio towers, currently under the control of public broadcaster Prasar Bharati, may be opened up for cash-strapped private radio operators.
Drawing comparisons with the telecom tower business, the department of telecommunications (DoT), at the behest of certain radio broadcasters, has pitched for opening up the tower business in the FM radio and broadcast sector so as to allow foreign direct investment (FDI) in the business. The move, if accepted by the government, could throw up a major business opportunity for the majority of the 35-plus private radio broadcasters that have, since its liberalisation in 2001-02, together pumped in more than R4,500 crore into the loss-making private FM radio business, which continues to be in the red.
According to a proposal sent to the ministry of information and broadcasting (I&B) recently, the DoT wants the FM radio tower business de-merged from the control of the Broadcasting Corporation of India (Prasar Bharati) and hived off as a separate entity that can then be opened up for private sector participation. Private players can then invite foreign investors to pick up stakes.
?Yes, DoT has raised the matter. We are responding to it,? an I&B ministry official said.
As per the laid down norms, it is mandatory for all private FM radio broadcasters to install their FM radio transmitters on common transmission infrastructure (CTI) created by Prasar Bharati and Broadcast Engineering Consultants India (BECIL), a specialised PSU dealing with technical matters related with broadcasting business.
However, DoT may have based its proposal on the norms for the third-phase of FM radio (FM-III) policy that state: ?If suitable infrastructure of Prasar Bharati is not available, successful bidders will have a choice to form a consortium and set up required land and tower infrastructure and CTI for co-location of all transmitters identified for that city. They will mutually decide infrastructure sharing methodology, commercial revenue sharing mode, service level agreement and methodology for upkeep of such infrastructure.? Sources said certain FM operators are also using this particular clause to lobby for moving the FM tower business from the control and interference of Prasar Bharati and BECIL. However, the FM-III policy also states that BECIL has been mandated to set up CTI in cities under FM-III.
So far, BECIL has set up CTI in 87 cities for 41 private FM broadcasters and operationalised 266 FM channels under phase I and phase II licensing policy of the government.
While a number of private FM operators declined to comment, Sunil Kumar, CEO of Big River Radio, an independent radio consulting firm, said: ?Theoretically, radio broadcasters would love to own the tower operations and the freedom to get foreign investments. But do they have the capacity to do it is the big question. Also, there are security angles in the transmission business so getting government clearance may be difficult.?
Industry sources say between the 245 operational FM stations, the annual revenue is pegged at around Rs 1,200 crore while the combined loss figure is a little over that.
?Under FM-III policy, operators will get the licence for 15 years. Owning an FM tower business will certainly make the balance sheet healthier. Secondly, a single FM operator can avail 26% FDI in radio business and another 26% FDI in the tower business if the two entities are separately counted,? said a senior executive in the finance department of a leading FM radio brand.