Bharti Airtel on Wednesday said it is in talks with Tata Group for a potential merger of their DTH operations. The two players have been in discussion for the merger of Bharti Telemedia and Tata Play for some time now. This comes at a time when the DTH industry is battling the challenges of a dwindling subscriber base amidst heightened competition from OTT players.
“Bharti Airtel Ltd and Tata Group are in bilateral discussions to explore a potential transaction to achieve a combination of Tata Group’s Direct To Home business housed under Tata Play Ltd, with Bharti Telemedia Ltd, a subsidiary of Airtel, in a structure acceptable to all parties,” Airtel said in a regulatory filing.
Tata Play is the leading DTH player in the country with 19 million subscribers. Airtel Digital TV currently has a base of 15.8 million subscribers. As of September 2024, India’s pay DTH subscriber base stood at 59.91 million, down from 62.17 million subscribers in June 2024, as per data released by the Telecom Regulatory Authority of India. Currently there are four pay DTH players in the country, including Dish TV and Sun Direct. On one hand, urban consumers are increasingly moving to OTT subscriptions, on the other hand Prasar Bharati’s free DTH service DD Free Dish is garnering consumers in smaller towns and remote areas.
For Airtel, the proposed merger will strengthen its broadband and entertainment offerings at a time when Jio is looking to integrate telecom, broadband, and content into a bundled package. The deal is expected to boost Airtel’s non-mobile revenue while reinforcing its ‘triple play’ strategy. For Tatas, the merger will help it to become part of the larger network as standalone DTH players are facing headwinds, analysts said. If this transaction goes through, this will be the second major deal between Bharti Airtel and Tata Group after the latter sold its mobile services- Tata Indicom in 2019.
Unlock synergies
“Both the DTH and digital cable industry is witnessing challenges and seeing a reduction in subscriber base due to competition from OTT players. If this transaction goes through, this consolidation will unlock synergies for the two players. Besides cost-related synergies, there could also be synergies in terms of revenue-share agreements with broadcasters. This will lead to better margins for the merged entity,” said Karan Taurani, Senior Vice-President, Elara Capital.
The talks also come at a time when DTH players are seeking a reduction in licensing fees. In fact TRAI has recommended that licencing fee for the DTH industry should be slashed to 3 per cent of adjusted gross revenues from the current 8 per cent and should be brought down to zero by FY27-end. The industry is facing a double whammy of sorts. On one hand, urban consumers are increasingly moving to OTT subscriptions, on the other hand Prasar Bharati’s free DTH service DD Freedish is garnering consumers in smaller towns and remote areas.
Media and corporate legal expert Ashok Mansukhani said, “Given the challenges, the consolidation in the DTH industry is inevitable. The industry needs support from the government in terms of a level playing field and TRAI’s recommendations should be implemented. DTH industry will increasingly need to position itself as an aggregator of services including linear TV channels, OTT apps and satellite broadband among others.”
