Returns on investments in the DTH sector have long gestation period and,hence,the company needs to raise additional capital to continue investing in its business. In what may be the biggest inflow of foreign investment in the direct-to-home (DTH) business by any private operator,Dish TV,the countrys largest DTH operator,is set to raise up to $200 million (around '1,000 crore) by issuing equity shares to overseas investors through multiple financial instruments,including Global Depository Receipts (GDRs),American Depository Receipts (ADRs) and Foreign Currency Convertible Bonds (FCCBs),among others. The company had raised about $100 million in November 2009 via a GDR issue to private equity firm Apollo Management in lieu of an 11 per cent stake. Dish TV has now sought permission from the Foreign Investment Promotion Board (FIPB),which is scheduled to take up the matter soon. When contacted,company executives confirmed having sought the FIPB permission to raise up to $200 million. The DTH services sector is very capital intensive and requires,on a continuing basis,high investments for financing installation of consumer premises equipments like set top box,antenna,cable etc. Returns on investments in the DTH sector have long gestation period and,hence,the company needs to raise additional capital to continue investing in its business, the company is said to have told FIPB in its application. Currently,the overall foreign shareholding in Dish TV stands at around 27 per cent,which includes FDI of 14.55 per cent and Foreign Institutional Investors (FII) share of a little under 13 per cent. Post the fund-raising exercise,the overall foreign shareholding in the company may reach around 38-40 per cent,well below the mandated 49 per cent mark for the DTH sector,which includes a 20 per cent FDI cap within 49 per cent foreign investment limit. Sources say with $200 million,any DTH firm can acquire at least five to six million new subscribers. Dish TV currently has a gross subscriber base of around 12 million with 30 per cent market share in a six-player market. The company has shown sustained growth in its financials. In its recently declared second quarter FY11-12 results,Dish TV witnessed a 48 per cent jump in its total revenues at '482 crore compared to the corresponding period last fiscal. The company's ebitda also recorded a 142 per cent growth at '121.8 crore compared to the corresponding period last fiscal. However,it posted a net loss of '48.6 crore,which was negatively impacted by the foreign exchange loss of '30.4 crore. The company also added 5.77 lakh new subscribers in the second quarter. So far,the six private DTH players have collectively raised over '2,000 crore from various foreign investors.
