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Hindujas get HITS licence, to invest $100 mn in the venture
MUMBAI: The wait is finally over for Grant Investrade, the investment arm of Hinduja Ventures, as the Ministry of Information and Broadcasting (MIB) has granted headend-in-the-sky (HITS) licence to the company.
With MIB’s letter of intent (LoI) in hand, Grant Investrade has to pay a non-refundable entry fee of Rs 100 million to the government. The HITS licence will be valid for a period of 10 years.
Grant Investrade will be the third company to receive a HITS licence, the first two being Essel Group and Noida Software Technology Park Ltd (NSTPL). While Essel Group had to shut its HITS service within a short while, NSTPL is currently the only HITS service provider in the country operating under the JAINHITS brand.
Confirming the development to TelevisionPost.com, Hinduja Ventures Ltd group CEO of media and IndusInd Media and Communications Ltd (IMCL) MD and CEO Tony D’Silva said that the company is awaiting few more clearances before it launches its HITS service.
While stating that the company is planning to invest $100 million in the HITS project, D’Silva said that the funding mechanism has not yet been finalised. “We will invest $100 million in the HITS project. However, we are yet to take a call on how to mop up the resources to take the project off the ground,” he stated.
D’Silva said that $100 million will be invested in building a state-of-the-art earth station, the site for which is yet to be decided. “We have to make investments in setting up the infrastructure like a state-of-the-art earth station and in procuring other critical equipments as HITS is lot more complicated than cable.”
The brand name under which the HITS service will be provided has not been decided yet. “We have not yet finalised the brand name for the HITS service,” said D’Silva.
The company plans to offer more than 400 channels to compete with cable TV as well as direct-to-home (DTH) operators. “We need seven to 10 transponders. However, we have not yet signed up with any satellite operator yet,” he revealed.
That should happen only after the additional clearances are obtained. Grant Investrade will now need clearance from Standing Advisory Committee on Radio Frequency Allocation (SACFA) under the Department of Telecommunications (DoT). After receiving the nod from SACFA, Grant Investrade will have to give a bank guarantee of Rs 400 million to the MIB.
After submitting the bank guarantee, the company will sign the grant of permission agreement (GOPA) with the MIB, following which it needs a wireless operational licence (WOL) from the Wireless Planning & Coordination (WPA) wing of the Ministry of IT and Communications.
Once it receives the WOL, it can start business as a HITS operator.
The HITS business model
The Hindujas’ HITS venture will be a white-label service, with the local cable operators (LCOs) having full control over their customers. The HITS company will just remain the technology service provider.
The LCOs will have to invest in set-top boxes (STBs) besides having the freedom of stitching their own content deals. Unlike the MSOs, the HITS company will provide MPEG-4 high-definition (HD) boxes and that, too, at the price of standard definition (SD).
D’Silva also revealed that the new company will work with multiple STB vendors rather than taking STBs from only a single vendor. The encryption technology provider has not yet been selected.
“We are not here to take ownership of the last mile customers as that belongs to the cable operators. We are a white-label service that will help the LCOs in digitising their network while helping them in retaining their customers,” averred D’Silva.
Will the STB investment not act as a deterrent for LCOs? “I don’t think that it will be a deterrent because ultimately they will collect the money from their customers. We are providing an HD MPEG 4 STB at the price of an SD STB which costs around Rs 1,200–1,500. We will also make the STB available on cash- and-carry basis so that cable operators can take only 10 to 15 STBs at a time if they want,” asserted D’Silva.
Queried whether allowing LCOs to negotiate their own content deals is feasible, D’Silva answered in the affirmative. “All licensed LCOs can opt for content as per their requirement. The broadcasters also need to be flexible while dealing with cable operators, otherwise they will lose out on reaching to those customers,” he explained.
The HITS service will help the Hindujas to expand into newer geographies particularly those covered under Phases III and IV of digital addressable system (DAS). “We have already got a lot of inquiries from LCOs who want to associate with us,” said D’Silva.
D’Silva is also the head of IMCL’s cable TV business. The multi-system operator (MSO) runs under In Digital brand in DAS and InCablenet brand in analogue cable. It has seeded over 2.2 million STBs in the first two phases of DAS.