Speaking at an investors' meet here today, ZTL chairman Subhash Chandra said that the parent company is floating a separate subsidiary to manage and operate the business where ZTL will hold around 25 per cent stake. The balance will be thrown open to the ZTL shareholders. The company also announced its ambitious entry into direct-to-home (DTH) business with an investment of Rs 120 crore.

The funds for its diversification would be raised through internal accruals and debts. The company wants to make use of its existing cable TV lines to provide internet connectivity, thus saving telephone costs for the subscribers. It will also offer e-commerce and portal services apart acting as an internet services provider (ISP).

Answering a question, he said that a portal service was much more than just a provision of ahome page, but would include a comprehensive package of services. ZTL will hold 25 per cent stake in the internet company. "We don't want to burden ZTL with new business which may take time to be profitable," said Zee TV chairman Subhas Chandra.

The internet services should be operational by October, he added. The existing subscribers of Siticable will be offered internet connections which is competing with Hindujas in network. The latter is also planning a similar diversification into upstream businesses.

Chandra also informed that Zee TV will be launching five regional channels in a span of two years. Subsequently, Zee will offer a basket of eight channels, including an exclusive channel for kids, by the end of year 2001. He also said that subsequent to shifting downlinking from Asiasat 1 to Asiasat 3A, uplinking will be shifted to its NOIDA studios from the existing arrangement at Hong Kong.

Meanwhile, French chartered accountant firm Deloite & Touche, which had done a valuation of Zee MultimediaWorldwide (ZMW) and Zee Telefilms Ltd. (ZTL), has recommended a share swap ratio of 1:1.3. Under the proposed ratio, every Zee Multimedia share will attract 1:3 shares of ZTL.

Zee Network chief executive officer Vijay Jindal said the swap ratio is yet to be put up for approval from the regulatory bodies and the shareholders. Incidentally, the ZTL board has approved the merger of the Mauritius-based ZMW with ZTL.