Tatas offload 10% in Tata Sky to Temasek

The Tata Group has divested 10% stake in its direct-to-home (DTH) venture Tata Sky to the Singapore government's investment arm Temasek for $56 million.

A source close to the development told PTI that the deal was inked almost a month back. Temasek is likely to make a formal announcement in this regard soon.  "Temasek has the option to increase its stake further to the permissible limit of 26%," the source said.

With this move, Tatas' stake in the company has come down to 70%.

Incorporated in 2004, Tata Sky started off as a 80:20 joint venture between the Tata Group and television network Star. The DTH service was launched last year.

The joint venture partners had earlier stated that the project cost for the venture would be around Rs 3,000 crore.

"Tatas have already committed huge investment and they have to make much more ton the leadership. This calls for further investment," the source pointed out.

Tata Sky has a total subscriber base of over half a million, and intends to take the number to one million by August this year.

Other than the conditional access system notified areas, Tata Sky's DTH offering is available in 4,200 towns across the country.

The competition in the DTH space is hottening up with the proposed entry of cash-rich companies like, Reliance, Bharti and Sun TV, the source said. Tata Sky is the market leader at present.

At the current rate of the growth, India would have anything between 15 to 20 million DTH subscribers in the next five to six years.