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Reliance Big TV plans to divest 49% in DTH arm

Surajeet Das Gupta & Ashish Sinha | April 29, 2009 05:07 IST

To expand its services in the five-player private direct-to-home market, Reliance [Get Quote] Big TV Ltd, the promoter of Big TV DTH services of the Reliance ADA Group, plans to sell up to 49 per cent to foreign private equity companies and global DTH players.

According to sources, a clutch of leading private equity companies like the Carlyle Group, Sequoia Capital, KKR and US-based DTH firm Direct TV are said to be in talks with Big TV, which launched in August 2008. The company expects to close the deal this quarter, sources close to the development said.

Investment banking sources said the company expects to raise about Rs 8,000 crore. Big TV is currently the second smallest player, with just over 1.8 million subscribers out of 12.5 million DTH customers in India. It is, however, hoping to leverage the Big brand, which also has interests in multiplexes, film production, FM radio and the movie rental business.

Big TV is the only DTH firm with no foreign investments. All other DTH players--Tata Sky, Sun Direct, Airtel's Digital TV and Dish TV--have foreign investments of more than 20 per cent, industry sources said.

Government norms allow 49 per cent foreign investment in DTH, with a rider that the foreign direct investment cannot exceed 20 per cent within the overall 49 per cent foreign investment cap.

Asked about the deal, a Reliance ADA Group spokesperson declined to comment, saying Reliance ADA Group is committed to its shareholders and will continue to explore various options to increase the shareholders' value.

Big TV claimed to have added over one million subscribers within 90 days of its launch, a record of sorts amongst DTH players.

All DTH players are currently looking for finance because the DTH service business model involves a significant financial subsidy for subscriber acquisition.

Dish TV, with over 5 million subscribers, is the leading DTH player, followed by Tata Sky (about 4 million), Sun Direct (over 2.3 million subscribers), Big TV and Digital TV.

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