Tatas to sell additional stake in Tata Sky to 21stCentury Fox, Temasek

The Tata Group is reported to have ended alliance talks with Bharti Enterprises after the latter dropped plans to pursue a mega-alliance in the telecom, overseas cable and enterprise services, and direct-to-home TV businesses and is instead looking at selling additional stakes to current partner 21st Century Fox.

Bharti Enterprises called off plans after the two groups held exploratory talks on a possible mega alliance between unlisted Tata Teleservices and Tata Sky and listed Tata Communications and Bharti Airtel, which has its own DTH arm.

The inclusion of Tata Sky in the proposed sale plan failed to sweeten the deal for Airtel, which has its own DTH unit, Mint had reported last month.

Tatas then reached out to DTH partner Rupert Murdoch's 21st Century Fox and Temasek to increase their stake, say reports.

Tata Sons holds 51.69 per cent in Tata Sky and 21st Century Fox owns 29.8 per cent in the DTH business through its investment arm Network Digital Distribution Services FZ Llc (NDDS) and is keen to increase it

Tata group is now in discussions with its joint venture partner to sell an additional stake in Tata Sky, its direct-to-home (DTH) television arm, reports cited two people close to the development as saying.

''Fox is looking to consolidate its position and control in several markets and has made repeated attempts to take over BSkyB, a television and broadband services provider in the UK,'' according to one source.

With 94.61 million DTH subscribers. India is already the largest DTH market in the world by subscriber numbers and Tata Sky had a 21.52 per cent market share as of December 2015, according to Telecom Regulatory Authority of India data.

While the government allows 100 per cent foreign ownership in DTH services, a regulation that caps foreign investments in media cross-holdings at 20 per cent could hamper a deal.

News Corp, another Murdoch company, owns the Star TV network in India.

However, given that NDDS already has a stake of around 30 percent in Tata Sky, the two sides are expected to carry on discussions and approach the government for approval onsuccessful conclusion of discussions.

Tata Sky started operations in 2004 as an 80:20 joint venture between Tata Sons and NDDS.

In 2008, Singapore's Temasek Holdings Pte Ltd acquired 10 per cent in Tata Sky and in 2010, NDDS was indirectly allowed to increase its stake in Tata Sky by 10 percent although foreign investment in the sector was capped at 20 per cent at that time.