Trai for 74% FDI cap on DTH, IPTV

Written by Rishi Raj | New Delhi, Aug 30 | Updated: Aug 31 2007, 06:03am hrs
The Telecom Regulatory Authority of India (Trai) has suggested a uniform 74% FDI cap for direct-to-home (DTH), cable TV and Internet Protocol Television (IPTV) services, in line with the foreign investment cap for telecom services. According to the regulator, since major telecom companies provide several of these services, the FDI levels should be harmonised.

Trai has, suo moto, written a letter to the department of telecommunications (DoT), information & broadcasting ministry and department of industrial policy & promotion to this effect. For Internet service providers, DoT recently reduced the FDI level to 74% from the earlier 100% on Trais recommendation, to align it with what is allowed to telecom operators.

In cable and DTH services, foreign investment is capped at 49%. For DTH, the FDI component is 20% while the remaining 29% can be through FIIs, OCBs and NRIs. Officials said that such discrepancies are leading to complications since major telecom companies are planning to offer DTH and IPTV services.

For instance, Bharti Airtel, which recently received approval from the I&B ministry for DTH services, had to restructure the equity of DTH arm Bharti Telemedia to meet regulatory guidelines. Since the FDI level in Bharti Airtel is 49%, it reduced its stake in Bharti Telemedia to 40% and another group company would pick up the remaining 60%.

Similarly, broadcasters have complained to the government that telecom players are at an advantageous position while providing IPTV services as they can have FDI up to 74% while the FDI cap for broadcasters was 49%. Broadcasters have sought a level playing field. The government has constituted an inter-ministerial group to frame regulatory guidelines for IPTV services.