Bharti Airtel is set to merge its DTH business, Airtel Digital TV, with Tata Play in a share swap deal, according to a report by The Economic Times. Airtel will hold a majority stake of 52-55 per cent, while Tata Play’s shareholders, including Tata Sons and Walt Disney, will keep 45-48 per cent. The deal is expected to help Airtel grow its broadband and entertainment business by bundling telecom, broadband, and DTH services.
The news of this merger comes amid Reliance and Disney’s Star India-Viacom18 merger, forming JioStar, India’s largest media company. If the merger goes through it will also be the biggest in India’s DTH sector since Dish TV’s merger with Videocon d2h in 2016.
Airtel Digital TV, housed under Bharti Telemedia, will gain access to Tata Play’s 19 million homes and half a million broadband customers. The combined entity had 35 million paid subscribers and FY24 revenues exceeding Rs 7,000 crore. The deal values both operations at Rs 6,000-7,000 crore each.
Telecom and tv industry trends
The pay-TV market has been facing a steady decline, with the subscriber base falling from 120 million to 84 million homes in recent years. According to the Telecom Regulatory Authority of India (TRAI), the number of DTH users has dropped to 60 million in financial year 2023-24 (FY24) from 70 million in FY21, signalling a clear shift in consumer preferences and a shrinking market for traditional pay-TV services.
Telecom operators, on the other hand, are well-positioned to benefit from the growing trend of OTT (over-the-top) content aggregation. They are better equipped to offer OTT services as part of their broader telecom and broadband packages. Meanwhile, DTH players, including Tata Play, are increasingly expanding their digital services to retain customers by adapting to the changing landscape of media consumption.
Both Bharti Telemedia and Tata Play are also dealing with significant regulatory hurdles. The two companies face pending license fee disputes with the government, with Bharti Telemedia’s dues amounting to Rs 5,580 crore and Tata Play’s amounting to Rs 3,628 crore. These ongoing disputes add an element of uncertainty to the merger and the overall financial outlook for the companies involved.
Tata Play, once valued at $3 billion before the pandemic, has seen its worth significantly drop to $1 billion. The company’s financial struggles, combined with mounting losses and a lack of plans for an initial public offering (IPO), have put it in a difficult position. In this context, the merger with Bharti Airtel provides a fresh opportunity for Tata Play to revitalise its business and explore new growth avenues.
Due diligence for the merger is expected to begin soon, and if everything proceeds as planned, the deal has the potential to reshape India’s TV and broadband market. By combining their strengths, the two companies can better compete in the increasingly competitive and evolving media and telecommunications sectors, offering integrated services that could meet the needs of a growing consumer base. Business Standard