Tata Sky plans to enter market with Rs3,000-cr IPO

Tata Sky, the satellite television business of Tata Group, is planning to file draft prospectus with market regulator Securities and Exchange Board of India (Sebi) for an initial public offer (IPO) of around Rs3,000 crore.

The direct-to-home (DTH) operator, which is jointly owned by the Tata Group and Walt Disney, is planning to list on the bourses by the end of this fiscal year, in March, reports citing sources said.
Tata Sky will soon file draft prospectus with Securities and Exchange Board of India (Sebi) by next month, reports said, adding that the IPO size could be between Rs2,000 crore and Rs3,000 crore, and would include a mix of primary capital raising and secondary share sales by existing investors. 
The IPO will also provide an exit route to Disney, which is not keen on continuing in the TV distribution business.
It will have a mix of primary capital raising for use in the business and secondary share sales by existing investors.
The DTH service provider started operations in 2004 as an 80:20 joint venture between Tata Sons and Network Digital Distribution Services FZ-LLC, the investment arm of Rupert Murdoch’s 21st Century Fox.
Later on, Disney acquired Fox in 2019. Now, Disney owns an additional 9.8 per cent stake in Tata Sky through TS Investments Ltd.
In fiscal 2008, Baytree Investments (Mauritius) Pte Ltd (Bay Tree), an affiliate of Temasek Capital (Pvt) Ltd acquired 10 per cent of Tata Sky's equity shares. In fiscal 2010, TS Investments Ltd (TSIL) acquired 20 per cent equity stake in Tata Sky. In fiscal 2013, Tata Opportunities Fund, through Omega FII Investments Pte Ltd, and Tata Capital Ltd acquired equity stake in Tata Sky.
Tata Sons, NDDS, TSIL, Baytree, Omega, and Tata Capital Ltd currently hold 41.49 per cent, 20.0 per cent, 20 per cent, 10 per cent, 7.8 per cent and 0.71 per cent, respectively, of Tata Sky's equity share capital.
Investment firm Kotak Mahindra Capital is advising Tata Group on the IPO along with a couple of foreign investment banks, sources said.
According to Telecom Regulatory Authority of India (Trai), Tata Sky had dominant share of 33.03 per cent of active pay DTH subscribers, followed by Dish TV (25.45 per cent), Bharti Telemedia (25.17 per cent), and Sun Direct (16.35 per cent), as of December 2020. 
Tata Sky had active DTH subscribers of 70.99 million at the end of the October-December 2020 quarter.
Tata Sky had reported a net loss of Rs234 crore in FY20 compared to a net profit of Rs364 crore in FY19. The DTH platform's operating income in FY20 stood at Rs4,691 crore, against Rs6,113 crore in the previous fiscal.
Revenue for FY20 was lower than the previous fiscal due to netting off of broadcaster payout since the content cost is a pass-through under the new Trai New Tariff Order (NTO), and hence will not be comparable to FY19.