- The merged company will have a behemoth market share of 61%
- The merged company will also boast of large synergies
After the introduction of the revamped tariff regime, the DTH industry has become competitive too. Similar to the telecom industry, in which financial pressure and intense competition drove consolidation in the sector, the DTH industry is starting to show the same signs. However, in the case of DTH industry, the seeds of consolidation were planted much before the Trai tariff regime came into place. The consolidation of the DTH industry started when Videocon D2h decided to merge with Dish TV to become the largest DTH company of India. Now in a new move, two major DTH companies of India, Airtel Digital TV and Dish TV are on the edge of combining their operations.
Airtel Digital TV and Dish TV Merger Details
It is worth noting that the first we heard about the merger of the Airtel DTH wing, Airtel Digital TV and Dish TV was in March. The rumours about the merger of the two companies started in the form of chatter in the industry and then grew into full-fledged news when there was confirmation about the same. The likely reasons for the merger of the two companies are pretty obvious and first one is related to synergies and bigger market share, which we will address in a while and the second is related to Dish TV’s financially troubled situations. But, also another thing which is crucial to note is the timing of the merger of these two companies which precedes only a few weeks of the launch of Reliance Jio GigaTV – the Internet-based IPTV service from Reliance Jio.
Formation of Massive Synergies
It can be said that Dish TV and Airtel Digital TV are using the merger as a defence strategy against Reliance Jio and its launch of GigaFiber and Giga TV. It is already apparent in the industry that Reliance Jio is going to resort to cheap plans and tariffs to amass more and more subscribers. In such a scenario, the broadband providers and the DTH providers are preparing themselves. The combination of the two big synergies of India, in the DTH sector, would mean better capex opportunities. This, in turn, would allow the merged companies to bear with low tariffs for a while.
Market Share of 61% for New Company
Also, owing to this merger, the merged entity will become the most significant market shareholder in the industry with 61% behemoth market share. Now it is worth noting that just like in the case of Vodafone Idea which gained market share by merging its operations, these two DTH companies will resort to the same technique, except this merger would be better timed as there are chances it can be finished before the launch of Reliance Jio GigaTV or GigaFiber and secondly because the market share being accumulated by the merged entity will be a massive wall for Reliance Jio.
It is worth noting that by December 2018, Dish TV had 23.6 million subscribers and it reported the operating revenue of Rs 1,517.4 crore and Airtel Digital TV, on the other hand, had 15 million subscribers towards the end of Quarter 3, FY 19 and its revenue from the DTH business stood at Rs 1,033 crore. Even with the launch of Giga TV, Reliance Jio will find it hard to crack the market share of the combined entity in the DTH business over the years as it did with Reliance Jio.
Arpit spends his day closely following the telecom and tech industry. A music connoisseur and a night owl, he also takes a deep interest in the Indian technology start-up scene and spends rest of his time spilling poetry and stories on paper.