Tata Sons to offload a part of its 60 per cent stake in direct-to-home Tata Sky Ltd

Tata Sons, a holding company of the Tata Group has 60% stake in the DTH (Direct-To-Home) Tata Sky Ltd.

  • DTH (Direct-To-Home) Tata Sky Ltd is loss-making company and thus, Tata Sons plans to sell a part of its share to private equity players and institutional investors and raise funds for the satellite TV company’s growth plans.
  • Tata Sky Ltd is a joint venture of Tata Sons (60%), Temasek (10%) and Murdoch’s Network Digital Distribution Services (30%).
  • Temasek is exiting the Tata Sky Ltd by selling its 10%  stake.
  • Rupert Murdoch’s Network Digital Distribution Services will trim a part of its 30% stake.
  • The company will still continue to use the “Tata” brand name.

Why this move by Tatas despite the recent digitization drive across India?

  • The Indian DTH market is growing by double-digit % figures and the recent digitization drive across metro cities has added to this growth.
  • Still the subscriber acquisition costs and churn rates remain high in this sector.
  • There are weak earnings of 5% and lower returns on capital employed in this sector.

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Categories: Business & Economy Current Affairs 2018

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