Airtel, Reliance, Zee, BCCL, NDTV And Mobile2Win On FDI Limits In Media And Telecom

In response to queries regarding foreign investment in Broadcast and Telecom sectors – with an eye on convergence – stakeholders have submitted their comments to the TRAI. On the key question of whether FDI limit for broadcast and telecom sectors be made the same, some key players have responded as follows:

Yes: Bharti Airtel, NDTV, Hathway
No: Reliance BIG TV (DTH), Times Now, Zee Group

Times Now doesn’t believe there’s a need for a uniform FI limit across media sectors. They justify this with the premise that a sudden infusion of foreign investment in some new segments like Radio can stall the progress of (other) companies have only just invested in the segment – they appear to be protecting Radio Mirchi’s turf. Furthermore, the BCCL owned channel wants to ban any further foreign investment in media until a fool-proof process of checking the source of funding is defined. They’ve also proposed that the FDI limit in news not be increased beyond 26 percent. The other BCCL group company Zoom has separately sent in the same document. [pdf]

Telecom bigwig Airtel (pdf), interestingly, doesn’t believe in separating the Broadcast Sector into Content and Carriage services, and suggests that there should just be a separate classification of News Content Service. In terms of methodology for calculation of foreign investment in a broadcast co, they’re far more radical – recommending that foreign holding below 5 percent not be counted as an indirect investment, and also that in case an Indian entity holds shares of a foreign company, and the foreign company invests in another Indian co, then it not be seen as a foreign investment; also, that a foreign financial investment (non-strategic) should not be counted as indirect foreign invesmtment. It’s unlikely that some of these suggestions will be accepted.

The Zee group was critical of the TRAI for an apparent “oversimplification” of FDI issues, and has actually recommended the delinking of spectrum and license, adding that in the USA, foreign companies are not allowed to bid for spectrum. They’ve added that the TRAIs recommendation of 74 percent FDI in Mobile TV is arbitrary, and that by allowing a foreign company to hold 74 percent in a Mobile TV license, they’re allowing them to hold 74 percent in Mobile TV spectrum. So they’re supporting delinking spectrum from license and content from carriage. [pdf]

A summary of comments from Reliance, NDTV and Mobile2Win in the extended text.

Reliance BIG TV (pdf), a DTH player, has tried to edge out the telecom players by proposing that foreign investment limits in Teleport, DTH, HITS, Mobile TV and Cable TV be limited to 49 percent, and for the same limit to apply to FM Radio and Satellite Radio. These limits should be inclusive of those by FDI, FII, NRI, FCCBs, ADR/GDRs and indirect foreign investment through investment/holding companies. Effectively that means that Telecom operators will not be in a position to offer content services, and it’s likely that this isn’t accepted either. Reliance is against separation of content and carriage, or 100 percent FDI in broadcasting.

NDTV Ltd wants an increase in FDI limit for News and Current Affairs TV channels, to be increased to 49 percent, if not more. They’re in favour of increasing FDI in the carriage segment to 74 percent. Perhaps they wont mind more opportunity for fund-raising. [pdf]

Gopala Krishnan, co-founder of Mobile2Win, has gone beyond having similar limits for telecom and broadcast – they’re against any restriction of foreign ownership in media and entertainment [pdf]