Indian Government scrutinises R-Com’s takeover of Digicable | News | Rapid TV News
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The acquisition of cable TV company Digicable by Reliance Communications (R-Com) for the provision of triple play services has come under the scrutiny of the Indian Government over the issue of cross holding regulations.

India’s cable and direct to home (DTH) satellite TV operators cannot hold more than 20% of shares in each other. The R-Com group, run by Anil Dhirubhai, also owns the Reliance Digital TV DTH platform – as well as internet protocol television (IPTV) and broadband operations.

According to Business Standard, the plan to establish Reliance Digicom, forged by the acquisition in July 2010 of all the stock in Digicable, was cleared by the high court of India.

The new entity would bring all of the TV and broadband operations under one umbrella, and provide R-Com with the ability to offer telephony, television and internet services to subscribers. However, the proposal is now being looked at by the Indian Ministry of Information and Broadcasting (I&B), according to the report.

“We have abided by the rules,” Jagit Singh Kohli, managing director and chief executive officer of Digicable told Business Standard. “The deal has been structured in such a way that there is no cross holding, either directly or indirectly. The I&B Ministry is looking at our submissions.”

A private equity company Ashmore will reportedly own 28% of Reliance Digicom, while Stellar Holding will own 10%, and R-Com will have the remaining 62%.

The new company is predicted to have a subscriber base of 15 million, making it one of the largest distribution and broadband companies in Asia.

Reliance Digital TV currently has 3.5 million subscribers, while Digicable delivers cable TV to 10 million homes, in Punjab, Uttar Pradesh, Madhya Pradesh, Rajasthan, Chhattisgarh and West Bengal.

Zee Entertainment Enterprises and Sun TV’s forays into channel distribution via cable TV, DTH and broadcasting have also come under the gaze of the I&B Ministry in the past.