Search the Internet          Tips  Sites: Finance, Investment

Govt mulls profit sharing for DTH

Bipin Chandran in New Delhi

The government is considering a proposal to amend the existing guidelines for Ku band direct-to-home telecast services to permit profit sharing instead of revenue sharing between the DTH operator and the government.

As per the existing guidelines, the companies operating in the DTH sector will pay an annual revenue share of 10 per cent.

The companies have been lobbying for such a change in view of the large investments required in running DTH operations. As a result of this, companies are able to make profits only after at least five years of operation.

It is estimated that a typical DTH platform with about 100-odd channels will require investments in the region of $500 million.

According to a senior government official, "The present norm of 10 per cent revenue share is likely to delay the breakeven point of the companies operating in the field. We are considering a proposal to allow companies to share profits once they become profitable so that they are encouraged to participate in this sector."

The government is also likely to allow companies to rent out set-top boxes instead of customers buying them as a move to give customers the freedom to change the service provider.

This move by the government comes at a time when the much-publicised DTH policy of the government, announced in November 2000, failed to attract companies. Since then, only one company, Space Television, has applied for a DTH licence.

Companies like Star TV and Subhash Chandra-promoted Agrani have been proposing changes in the existing DTH policy to provide companies with an easier operational environment.

The 10th Five-Year Plan working group of the Planning Commission had asked the government to review the DTH policy. "The present policy has not encouraged any player to promote the use of digital set-top boxes so far. This needs to be reviewed at the earliest," it said.

Powered by

ALSO READ:
More Money Headlines