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Sun Direct in talks to raise Rs1,000 crore
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Chennai: The direct-to-home (DTH) service promoted by Kalanidhi Maran, Sun Direct TV Pvt. Ltd, is negotiating with several bankers to raise Rs1,000 crore in debt to fund its expansion in the current financial year, a top company official said.

About 90% of the money raised would be used to import set-top boxes, a device used to beam digital signals directly to televisions. Maran is chairman and managing director of Sun TV Network Ltd, the No.1 broadcaster in Tamil Nadu.

“As of today, we are managing with internal resources… There are quite a few options available now—one is you can raise debt, then there is bill discounting,” said Tony D’Silva, chief operating officer, Sun Direct. The Chennai-based company has so far been debt-free.

D’Silva said the company is in talks with a consortium of Indian bankers and will arrive at a decision by end-August, depending on the “debt cost”. He ruled out private equity investments at this stage.

The DTH market in India has expanded fast over the past five years. New Delhi-based research firm RNCOS E-Services Pvt. Ltd said in a June report the Indian DTH market has acquired at least 12 million subscribers over the past five years.

Shushmul Maheshwari, chief executive of RNCOS E-Services, expects DTH service revenue in India to “more than double in the next few years, representing a CAGR (compounded annual growth rate) growth of around 38% from 2009”. “The Indian DTH market is currently worth around Rs30-35 billion. Future growth potential in this market is very high owing to low penetration,” he said in an email.

According to another recent report by audit and consulting firm KPMG and industry lobby Federation of Indian Chambers of Commerce and Industry, India’s DTH subscriber base is estimated to grow to around 28 million by 2013.

Currently, there are five main DTH players: Sun Direct; Dish TV India Ltd of the Essel Group; Tata Sky Ltd, a joint venture between the Tata group and News Corp.; Airtel DTH, part of Bharti Enterprises; and Big TV Ltd, a unit of the Reliance-Anil Dhirubhai Ambani Group.

Sun Direct, launched in December 2007, is an 80:20 joint venture between the Kalanidhi Maran family and Astro Group of Malaysia. The promoters have so far invested around Rs1,500 crore in the venture, proportionate to their holding, D’Silva said.

He added that Astro has given its consent for Sun Direct to raise debt or for both partners to pump in more money. Astro did not respond to an email sent on Wednesday night.

Sun Direct has procured one million set top boxes so far in the current financial year and is looking to buy 3.5 million more. The firm has close to 3.8 million subscribers and expects to add two million at least over the next eight months.

“It is a capital optimization decision of a company. For any DTH company which has a large outlay, in the first couple of years debt would be a preferred route… And I think that is what Sun DTH is doing,” said Rajesh Jain, KPMG head, information, communication and technology.

Jain estimates the current number of DTH subscribers in India at a little more than 14 million, with five million each for Dish TV and Tata Sky and four million for Sun Direct.

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