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Dish TV-Videocon d2h merger gets company law tribunal nod; GDR portion of merged entity to list on LSE

MUMBAI: Direct-to-home (DTH) companies Dish TV and Videocon d2h are close to completing the merger process with the National Company Law Tribunal (NCLT) giving its approval.

Dish TV will now seek approval from the Ministry of Information and Broadcasting (MIB). The order of the NCLT will also be filed with the Registrar of Companies (RoC).

The appointed date for the scheme of arrangement is 1 October 2017.

The GDR portion of the merged entity will be listed on the London Stock Exchange, a source said. The earlier plan was to list on the Luxembourg Stock Exchange in the form of GDRs.

The listing on the London Stock Exchange will coincide with the listing of the merged entity in India on the NSE and the BSE.

Videocon d2h will be delisted on the Nasdaq.

The Mumbai bench of NCLT has approved the scheme of arrangement amongst Videocon d2h and Dish TV India and their respective shareholders and creditors, Dish TV said in a regulatory filing.

The merged entity, to be named Dish TV Videocon, will create the largest DTH company in India and the second-largest in the world by subscribers, behind only DirecTV.

The merged entity will have a 45% market share of the total DTH subscriber base. India’s six private DTH companies have a net subscriber base of 63.61 million, as of 31 March 2017. Dish TV has a 25% share of net subscribers compared to Tata Sky’s 23%. Airtel Digital TV’s share is at 21%, Videocon d2h at 20%, Sun Direct at 9% and Reliance Digital TV at 2%.

Dish TV has a mix of 70% rural subscribers and 30% urban subscribers (top 200 towns). In the case of Videocon d2h, rural subscribers comprise 60% while urban accounts for the rest 40%.

In November 2016, Dish TV and Videocon d2h announced their merger proposal. As per the deal, Dish TV shareholders would own 55.4% of the enlarged new company. The remaining 44.6% stake in the merged entity would be with the Videocon d2h investors. The Dish TV promoter holding would be 36%. Vd2h promoters would have 28%. Dish TV promoters, however, could buy more shares from the principals of Videocon d2h in a supplementary transaction.

Earlier, the Competition Commission of India (CCI) had given Dish TV and Videocon d2h its go-ahead to merge their assets, thereby paving the way for the creation of a TV distribution behemoth. Dish TV had also got the approval of capital markets regulator SEBI for the proposed merger with Videocon d2h.

The DTH sector is in the midst of a consolidation wave. Tata Sky and Airtel Digital TV are reportedly in exploratory talks for a merger. This is part of a broader discussion between the Tata Group and Bharti Enterprises to evaluate an alliance that would also involve their telecom, overseas cable and enterprise services.

21st Century Fox is also said to be in talks with the Tata group to up its stake in Tata Sky. While Tata group owns 60.2% stake in the DTH firm,  21st Century Fox effectively holds 29.8% stake and the remaining 10% is with Temasek Holdings.

Anil Ambani-promoted Reliance Digital TV is looking to exit. Sun Direct, which has 97% of its subscribers from South India, could be a potential buyer.