Last when we reported development about this, the Telecom Regulatory Authority of India (Trai) was ideating on the likely net worth of MSOs for their eligibility. Now a new update has come up which points out that Mukesh Ambani led Reliance Jio Media has made a suggestion about the eligibility of the MSOs saying that their minimum net worth should be Rs 18 crores. To recall, Trai had floated a consultation paper titled ‘Entry Level Net worth requirement of Multi-system Operators in Cable TV services’ to which Reliance Jio Media had drafted a counter comment saying that the figure of Rs 18 crores has been calculated keeping in mind the basic CAPEX requirement for getting an MSO off the ground.
New Trai Tariff Regime and Requirements for MSO Setup
This net worth amount also considers that the Multi System Operator (MSO) would have a channel capacity of 300 and a minimum of 50,000 subscribers which is the minimum number of viable subscribers for the MSOs to sustain in the business. Reliance Jio Media also added that this requirement is for headend, CAS and SMS system which would comply fully with the quality of service norms laid down by the Trai for the setup of an MSO.
To this, the company also added that the essence of the new Trai tariff regime of 2017 has to do with a level playing field for all the operators, DPOs, cable TV providers and MSOs and to bring fair pricing and enhanced quality for the subscribers. The new tariff regime is also in favour of all ownership models like registered partnership or proprietorship, registered companies or a group of individuals to meet the minimum requirements. The company has also proposed that in case of a group of individuals who want to setup MSO, the minimum net worth requirement must be verified by the submission of Net worth Certificate, Balance Sheet and P&L accounts to the Ministry of Information and Broadcasting (MIB).
CAPEX Requirement Should be the Real Factor Says Reliance Jio Media
These documents can further be examined by a Chartered Accountant (CA) to verify the net worth being claimed by the applicant. Reliance Jio Media also stated that classifying MSOs based on their area of operation would not be of much use since the CAPEX required for setting up for MSO infrastructures like headend, SMS and CAS would be substantial. The components which are variable in this picture are channel capacity, number of STBs network costs.
The company added, “Therefore, minimum CAPEX requirements will be similar for all MSOs irrespective of the area of operations, and hence the area of operations will not be a suitable criterion to determine minimum net worth criteria requirements.”
The company said that now classifying MSOs based on their area of operation would be a backward step and CAPEX requirement should become the parameter to determine the net worth in this case.
