Discussions between Bharti Airtel to acquire Tata Play have now reached an advanced stage. The combined entity will account for over 38 million direct-to-home (DTH) subscribers or more than 60 per cent of the market, making it the largest player.
For a while now, it is gathered, the Tatas have been looking to exit the business. At a consolidated level (DTH and broadband together), for FY24, it had a total income of Rs 4,327 crore, a slight drop from Rs 4,530 crore for the previous fiscal. However, its losses zoomed from Rs 102 crore to Rs 433 crore or an increase of over 4X.
Those familiar with the deal told Business Today that the new resultant merged entity (between Bharti Telemedia that houses the group’s DTH business and Tata Play), will not have any representation from the Tata group. “The contours are still being worked out and it is possible that there could be an equity arrangement,” they said. It is expected that there will be significant operating and cost synergies.
Neither Tata Play nor Bharti Airtel responded to an email from Business Today seeking comments on the issue.
In December 2022, Tata Play made a confidential IPO filing with SEBI. That plan was later shelved. In the case of Bharti Telemedia, (a subsidiary of Bharti Airtel), a report put by Crisil Ratings last July says the business had a revenue of Rs 3,045 crore with a loss of Rs 76 crore.
The overall DTH story has not had it easy when it comes to getting in new subscribers. Data released by the Telecom Regulatory Authority of India (TRAI) shows the overall numbers dropping from 62.17 million in June 2024 to 59.91 million in September 2024. Compare that to 64.18 million for September 2023, with the market clearly being dominated by Tata Play with a share of 31.99 per cent and 29.38 per cent for Airtel. Dish TV accounts for close to 20 per cent, while Sun Direct follows it at 19 per cent. The challenging business scenario has been attributed to more subscribers taking the OTT route to consume content, a trend becoming very marked in a post-pandemic world.
From a strategic point of view, the deal is expected to help Airtel strengthen its presence in the digital TV space. For the Tatas, which sold its mobile business, Tata Teleservices to Bharti Airtel in 2017, it will mark an exit from a business that was launched in 2001. In terms of shareholding, Tata Sons holds a 70 per cent stake in Tata Play.
Singapore’s Temasek accounted for 10 per cent, which was bought by Tata Sons last April (Temasek made this investment in 2007) for around $100 million – importantly, it brought down the valuation of Tata Play to $1 billion, a sharp drop from $3 billion prior to the pandemic. The other 20 per cent is held by The Walt Disney Company post its acquisition of 21st Century Fox by Rupert Murdoch.