Higher FDI in broadcast sector to improve accessibility: KPMG

The recent government decision to raise foreign direct investment (FDI) in the broadcast sector will help improve accessibility of broadcasting services along with adoption of international practices, according to a report by KPMG.

The report has said the government's decision has come at a time when the industry required a large amount of capital to fund its digitisation drive.

In a bid to liberalise the broadcast sector and attract foreign capital, the centre last week raised FDI cap to 74 per cent in various services of the sector, except the news channels and FM radio where the cap of 26 per cent has been retained.

The decision will apply to broadcast carriage services providers including direct-to-home, head-end in the sky, multi-service operators and cable TV.

The report also said the decision to rationalise the methodology of calculating FDI would also help create a level-playing field for content carriers across the broadcasting and telecom sectors.

The report said the ongoing digitisation efforts would require large capital expenditure on digital head-ends, back-end infrastructure and set-top box (STB) installation, which could be met through easing of FDI norms.

"We estimate that an investment of Rs 20,000-25,000 crore is required to fund this capital expenditure. With easing of FDI norms, the industry is expected to witness consolidation in the near term," the report said.

Incidentally, the government has mandated complete digitisation in the four metros by October 31.

According to an I&B ministry report early this week, cable TV digitisation has reached 68 per cent in August in four metros with Mumbai leading at 95 per cent, followed by Kolkata at 67 per cent, Delhi at 53 per cent and Chennai at 49 per cent.

The Cable Television Networks (Regulation) Amendment Act of 2011 had made digitisation mandatory by December 2014 across the country in four phases.