The Attorney-General of India has given his approval to Tata Sky’s proposal to change its equity structure.
According to the proposal, Omega TC Holdings and Tata Capital will be the new shareholders in the Direct-To-Home company.
Post the deal, Tata Sons’ share in the company is expected to come down by about three per cent.
Tata Sky is a joint venture between the Tata Group and Rupert Murdoch’s STAR. Currently, Tata Sons owns 60 per cent, while STAR owns a 30 per cent stake.
Both Omega TC Holdings and Tata Capital are Tata Group companies.
Legal opinion
The proposal was sent for legal opinion to check if the revised structure would change management control. Under the DTH guidelines, companies are supposed to have Indian management control with majority representatives on the board as well as the CEO being a resident Indian.
“I am of the view that the clauses referred to do not amount to conferment of control on Omega… If the investor voluntarily or involuntarily reduces his shareholding below 3.5 per cent then the fundamental issue clause would not apply,” Attorney-General, Goolam Vahanvati, said in his opinion sent to the Government.
Vahanvati was asked to comment on four questions including one on whether the proposal from Tata Sky was in compliance of the guidelines on direct and indirect control with respect to the foreign investments.
The Indian DTH segment is abuzz with a number of deals. While Bharti Airtel is looking to divest 20-25 per cent stake to private equity players, Reliance’s Big TV is understood to be in talks with Sun Direct for a merger.