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MIB cancels provision of tripartite agreement between DTH firms and lenders

MUMBAI: The Ministry of Information &
Broadcasting (MIB) has cancelled the provision of
tripartite agreement that allowed direct-to-home
(DTH) companies to utilise the licence agreement
as security to lenders for seeking financial aid
from banks or financial institutions.
On 3 December 2009, the ministry had passed an
order which required all DTH licensees desirous of
assigning their licence agreement as security to
the banks/financial institutions for receiving
financial loan/assistance for the setting up/
operation of DTH services to execute a tripartite
agreement as per a prescribed format between
the licensor (the President of India acting through
the MIB director of broadcasting policy and
legislation), the licensee and the lenders.
The ministry had decided to go for tripartite
agreements as it had been receiving requests
from DTH licensees for assignment of their licence
agreement as security to the banks.
However, there were no prescribed terms and
conditions based on which the ministry would
consider such requests.
Hence, the ministry had examined the matter in
light of the provisions contained in Articles 2.2 &
6.4 of the DTH Licence Agreement and followed
the procedure prescribed for the telecom sector
and came up with the provision.
Meanwhile, a lot has changed since 2009. The
DTH industry has seen unprecedented scale and
the leading player, Dish TV, has already achieved
a full-fiscal net profit.
Three other players, namely Tata Sky, Airtel
Digital TV and Videocon d2h, have already
achieved operational breakeven. Reliance Digital
TV and Sun Direct are led by big corporate
In such a scenario, DTH experts now believe that
their businesses have grown enough so that they
do not need the licence agreement as collateral
for loans.

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