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News |  17 Apr 2009 10:54 |  By aparnajoshi

Worldspace to go ahead with organisational plans in India

MUMBAI: Worldspace plans to go ahead with its overall organisational plans and without any major changes in its approach of business execution in India, says Worldspace India managing director M Sebastian.

The only satellite radio service provider in India currently, Worldspace has sought a five-year time period to migrate into the new licensing regime once it is finalised.

Worldspace, in a official communiqu?© to the Information and Broadcasting Ministry, said that the company would divest 26 per cent equity in favour of Indian equity investors, within a five-year timeframe.

"Yes, we had requested a five year time frame to help us complete some of the requirements such as dilution of equity in a proper manner," agrees Sebastian. Responding to media reports that the government has agreed to sanction it a time frame of three years, Sebastian said that the company is not aware of the final decision of the Government as it is not yet announced publicly.

The opening of the new policy guidelines for satellite radio could mean there will be more competition for sole player WorldSpace in India from players like XM Sirius or even the private FM players who might eye the satellite space. Sebastian acknowledges this, saying, "While we need to wait till the policy is out to know the exact details, if the indications are true, it might open up the satellite radio space for other players."

The parent company rechristened 1Worldspace is just recovering from imminent bankruptcy. The company, which filed for bankruptcy protection in October 2008, won court approval to sell itself to a company controlled by founder and chief executive Noah Samara in March 2009.

Says Sebastian, "We have been passing through a difficult phase globally, but I am glad that we have been able to successfully conclude the restructuring process under the Chapter 11 protection. Various factors, including the overall slowdown in the economy, has affected our business but we are happy with the progress made so far in spite of these challenges."

In India, Sebastian says the company is  optimistic about the future prospects, especially with the expected finalisation of the satellite radio policy. At present, World Space provides 34 radio channels in India that include BBC World and London-based WRN news channels. World Space was launched with the intention of providing digital satellite radio primarily in the emerging markets of Asia and Africa. The radio services are provided on a subscription basis and the radio services are uninterrupted because it has no spots. The only source of income is subscriptions. Worldspace has an estimated 175000 subscribers in India who have to pay Rs 1800 per annum.

As per the draft cabinet note circulated by Information and Broadcasting Ministry, the 74 per cent FDI cap will be set for Satellite radio operators, on par with those on other platform services like teleports and Direct to Home (DTH).

The bidding for licenses to enter the satellite radio space are likely to be held once the current Lok Sabha elections are completed. The government also foresees a chunk of FM radio broadcasters offering satellite services, as most of the licence norms would be similar between the two.

FM radio service providers cover 35.50 per cent population and a geographical area of 24.41 per cent. About 245 FM channels are operational in the country across 87 cities. As per policy formulation under consideration, FM services may be extended to another 210 cities.

Meanwhile, media reports say the Foreign Investment Promotion Board (FIPB), in the finance ministry, will on Monday take up the proposal of satellite radio service provider WorldSpace for providing web-based services.

WorldSpace has been keen to offer online radio service in India, having initiated a project in partnership with with MSN India in 2007, under which WorldSpace had started offering five music channels at a subscription fee. The service was discontinued after some months.

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