Reliance Jio Media proposes Rs 18 cr as minimum net worth criteria for MSOs

MUMBAI: Mukesh Ambani’s Reliance Jio Media has suggested that the minimum net worth criteria for a multi system operator (MSO) should be Rs 18 crore.

In its counter comment to the Telecom Regulatory Authority of India’s (TRAI) consultation paper on ‘Entry Level Net worth requirement of Multi-system Operators in Cable TV services’, the Reliance Jio-owned MSO stated that the company has considered basic CAPEX requirements for establishing an MSO infrastructure have been considered to arrive at this amount.

The net worth amount is based on channel capacity of 300 and 50,000 subscribers which is the minimum number of subscribers for a viable MSO business.

It further stated that the above prices are for Headend, SMS and CAS systems that are fully compliant with the QoS and technical requirements prescribed by TRAI.

While noting that presently there is no minimum net worth criteria for MSOs, Reliance Jio Media stated that laying down minimum net worth criteria for MSOs is required in order to ensure a minimum level of quality of service (QoS) is maintained and TRAI’s norms are complied with.

The company also submitted that the spirit of the TRAI’s 2017 Regulations on Tariffs, QoS and Interconnection is to treat all DPOs at par with each other, promote a level playing field, minimize disputes among stakeholders and provision of Quality services to subscribers.

It also in favour of allowing all modes of ownership models such as registered proprietorship/partnership firms, registered companies and a group of individuals to continue subject to the meeting the minimum net worth criteria.

To verify the net-worth in case of individual or group of individuals, the company has proposed that the current practice of the ministry of information and broadcasting (MIB) which requires submission of the Net worth Certificate, Balance Sheet and P&L accounts should be submitted along with the application.

These documents can be examined by an empaneled Chartered Accountant, to verify the actual net worth of the applicant.

Reliance Jio Media also submitted that the classification of MSOs on the basis of the area of operations will not be of much utility since the basic cost of establishing MSO infrastructure (Headend, SMS, CAS etc) is substantial. The variable CAPEX components are the number of STBs, channel capacity and network costs.

“Therefore, minimum CAPEX requirements will be similar for all MSOs irrespective of the area of operations, and hence the area of operations will not be a suitable criterion to determine minimum net worth criteria requirements,” it added.

It also stated that minimum CAPEX requirements should be considered as the basis to determine the minimum net worth criteria and not the area of operations.

All registered MSOs that had been permitted to operate in designated areas have been permitted to operate on a PAN India basis, hence classification on the basis of area of operations would be a step backward direction, it contended.

However, if the classification is done on the basis of the area of operations, then the company has suggested that the same should be on the basis of a. MSOs operating in multiple states could be classified as National MSOs, b. MSOs operating in a single state can be classified as State level MSOs, c. MSOs operating in only one district can be treated as District level MSOs.

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