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Bharti rules out foreign investment in DTH biz
MUMBAI: Bharti Airtel, India’s largest telecom operator, said that its direct-to-home (DTH) venture, Bharti Telemedia does not require the approval of the Foreign Investment Board (FIPB), as the investment has come from Bharti Airtel’s internal accruals.

Responding to questions raised by FIPB regarding foreign investments in Bharti Telemedia, the company said there is no cash flow or investment from any foreign entity into Telemedia either directly or through Airtel.

In a letter to FIPB, Telemedia said FDI investment into Airtel has been in accordance with the norms and cap in the telecom sector and duly approved by FIPB. “Further, there is no FDI investor who has invested in Airtel specifically for downstream investment in the DTH sector. Accordingly, Bharti Telemedia did not apply for FIPB approval as it was not seeking fresh FDI or overseas investment,” it added.

This communication has come in response to a query from FIPB, which said approval for Bharti’s DTH services was “subject to compounding” (confirmation) by the Reserve Bank of India. Bharti said that “compounding” was not applicable in this case as only Indian money has been invested in Telemedia and no foreign money was routed to the company.

The government had earlier said the shareholding structure provided by Bharti Telemedia did not have FIPB approval and this was not in accordance with existing FDI policy. Last year, the Information & Broadcasting Ministry had also raised questions about Bharti Telemedia not having FIPB approval for foreign investments coming into it on a pro-rata basis through investing firms, including Airtel.

According to the FDI guidelines for DTH, total foreign equity holding in a company should not exceed 49% and the FDI component within the foreign equity should not exceed 20%. Airtel has 40% stake in Bharti Telemedia, while the remaining is held by an “Indian company of the Bharti group”, a Bharti spokesperson said.

Bharti also pointed out to FIPB that under the revised FDI policy, as per Press Notes 2 and 4, announced in February this year, Airtel qualifies as a company “owned and controlled” by resident Indians and there is no indirect FDI into Telemedia through Airtel.

Under the revised Press Notes, a company is considered Indian if Indian promoters have a stake of at least 51%. Moreover, the investments made by such companies in any joint venture or downstream venture will be treated as Indian. Since a major part of SingTel’s 31% stake and Vodafone’s over 4% share in Airtel is routed through majority-owned Indian companies, Airtel is owned and controlled by Indians.

Airtel launched its DTH services in October last year. It competes with Tata Sky, Reliance Communications’ Big TV, Zee’s Dish TV and Sun Direct in this segment. The company hasn’t yet started disclosing revenues from DTH services separately. “We will start disclosing the operational and financial performance of DTH operations next year, once they become material,” Airtel CEO and joint MD Manoj Kohli said recently.

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