Why DTH companies Tata Play, Airtel Digital TV, others are under scrutiny

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Indian Market
by 5paisa Research Team Last Updated: 2022-10-26T11:25:22+05:30

India's four main direct-to-home (DTH) service providers Tata Play, Airtel Digital TV, Sun Direct and Dish TV could be in the crosshairs of the government auditor for accounting practices, a report in The Economic Times has said. 

The Centre has sought a special audit of direct-to-home (DTH) TV service providers on the long-running dispute over licence fees, the report as said.

These four DTH services are operated by four listed companies--Bharti Airtel, Sun TV Network, Tata Communications and Zee. 

What exactly has happened so far?

According to the report, the Union Ministry of Information and Broadcasting wrote to the Comptroller and Auditor General (CAG) of India this week asking for an intensive audit of all DTH service providers going back to their year of inception or grant of licence by the government.

The move reportedly comes over suspected discrepancies in revenue calculation by DTH service providers. 

The I&B ministry has, accordingly, asked the CAG to conduct a special audit to ensure that the amount submitted to the central government by way of licence fee is "correctly assessed and collected."

What is the background to this whole affair?

DTH operators had sought a licence fee waiver in May, citing a decline in subscribers over the years, due to factors such as the advent of streaming services. Six DTH licences were granted by the Centre between 2003 and 2007.

While there are only four in the fray now - Airtel Digital TV, Tata Play, Dish TV and Sun Direct - the CAG audit has been sought for all six. The audit, therefore, will cover Big TV/Independent TV as well as Videocon's D2H TV, the report has said. 

The licence fee issue, which has been simmering for years, has been the subject of litigation as well. In December 2020, the Essel Group running Dish TV had got a Rs 4,164 crore notice from the I&B ministry seeking payment of licence fees and interest since inception in 2003.

How many subscribers do these services have?

The four in the fray besides the free DTH provider - DD Free Dish, run by government-owned Doordarshan - have a total 68 million plus subscribers. DTH service providers have to pay a part of their revenue as licence fees to the Centre.

What revenue share do these companies have to cough up?

They have to pay 8% of annual gross revenue as recorded in the audited accounts of the company.

What are government officials concerned about?

According to the report, there are concerns among the government officials that the revenue calculations as recorded by different operators have been dropping and aren't along expected levels.

How much money does the government make from licence fee revenues?

Revenues from the DTH licence fee, along with those from commercial TV services, FM radio etc., are expected to exceed Rs 1,000 crore in FY23.

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