The Tata and Bharti groups are in the final stages of merging their loss-making direct-to-home (DTH) businesses, Tata Play and Airtel Digital TV, respectively. The agreement comes as the pay-TV industry faces a sharp decline due to growing OTT consumption and the rise of free DTH services like DD Free Dish, ET reported, citing people familiar with the matter.
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The merger will be executed through a share swap, enhancing Airtel's non-mobile revenues through convergence. According to sources, Airtel will hold a majority stake of over 50 percent in the combined entity, the report said. Airtel Digital TV operates under Bharti Telemedia Ltd, a wholly owned subsidiary of the publicly listed Bharti Airtel.
Merger Details
Airtel will hold 52-55 percent in the combined entity, while Tata Play shareholders, including Walt Disney, will retain 45-48 percent. The deal values both companies at Rs 6,000-7,000 crore each, according to the report. Tata Play’s 19 million homes will strengthen Airtel’s "triple play" strategy, integrating telecom, broadband, and DTH services.
"This will be a non-binding agreement," the report quoted an executive as saying. "But with both sides engaged for months, they should move fast to close out all the outstanding issues. For Tata, this has been a drag, and like telecom, they are striking an alliance with a group they are comfortable with."
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Market Trends and Industry Impact
The move follows Tata Sons' recent acquisition of Temasek's 10 percent stake in Tata Play for Rs 835 crore, valuing the company at USD 1 billion, a sharp drop from its USD 3 billion pre-pandemic valuation. Tata Sons owns 70 percent of Tata Play. With IPO plans dropped and losses mounting, valuations have dipped further, said industry executives, according to the report.
Disney will retain its shares in the merged entity, as other stakeholders are unlikely to purchase them for cash at this stage, the report stated, citing sources. The US media giant has been seeking to exit the TV distribution business after streamlining its portfolio and merging its media operations with Reliance Jio in India.
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As of September 2024, the two entities had a combined total of 35 million paid subscribers, with FY24 revenue surpassing Rs 7,000 crore. Additionally, Tata Play serves half a million broadband customers through its subsidiary, Tata Play Broadband.
