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.