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

November 29, 2012

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.