Airtel, Dish TV Merger To Create Largest Distribution Platform

airtel dishtv

Sunil Mittal promoted Airtel Digital TV planning to merge the country’s biggest DTH operator Dish TV with itself.

The move would serve two purposes – A) becoming the world’s largest TV distribution, B) to counter the threat from Reliance Jio in the direct-to-home (DTH) TV market.

It may be recalled that Mukesh Ambani’s Reliance Jio took a controlling stake in two of the country’s largest multisystem operators – DEN Networks and Hathway Cable & Datacom.
Bharti Airtel and private equity firm Warburg Pincus have agreed to combine DTH operations of Airtel and Dish.

Through this merger, Bharti Airtel promoters plan to address debt and other issues.

It will also help ease off the pressure of ARPU (average revenue per user) on the DTH industry as there will only be two national players and one regional player.

Bharti Airtel, Warburg Pincus, and Essel Group have agreed on deal structure, wherein the DTH business of Dish TV India will be hived off and merged in Bharti Telemedia, which houses Airtel Digital TV.

The final scheme of arrangement and other details are being worked on.

Warburg Pincus, which picked up a 20% stake in Bharti Telemedia for $350 million in December 2017, is expected to remain invested in the company post-merger.

Dish TV India, a listed company, will continue to offer non-DTH services including Dish Infra Services (infra support business) and own 51% in C&S Medianet, its distribution consultancy joint venture with cable TV service provider Siti Networks.

Together, Airtel Digital TV and Dish TV will create the world’s largest TV distribution company with just over 40 million subscribers and over 62% share of India’s DTH market.

It will be followed by Tata Sky with about 25% market share and regional DTH player Sun Direct.

In the quarter ended September, Dish TV had 23.94 million subscribers with operating revenue at Rs 893 crore and an operating profit of Rs 520 crore.

Airtel Digital TV had 16.21 million subscribers, and its revenue from the DTH business stood at Rs 789 crore with Ebitda of Rs 561 crore during the quarter.

India has six DTH players at one point in time. While Dish TV took over Videocon d2h in March last year, Reliance Digital TV changed hands and turned free-to-air.

What will this merger mean for Dish Tv shareholders?

We understand that the exact deal structure of this merger is yet to be finalized. Also since the DTH business will be taken over by Bharti Telemedia which may be listed separately in future

However, post this merger deal the Dish Tv stick will house only the DTH infrastructure business which is smaller in size and profitability. Hence Dish Tv’s shareholders are unlikely to see any gain in the sticker price in the near term

While long term prospects for the DTH business appear good this deal is unlikely to make a big material difference to the shareholders in the short term. Long term prospects would depend on when Bharti Telemedia gets listed separately but here also it remains to be seen how it survives and competes with Reliance Industries broadband service which has now become a big competitive threat to the entire DTH business in India

Disclaimer –
This document is meant for the recipient only for use as intended and not for circulation. This document should not be reproduced or copied or made available to others. The information contained herein is from the public domain or sources believed to be reliable. While reasonable care has been taken to ensure that information given is at the time believed to be fair and correct and opinions based thereupon are reasonable, due to the very nature of research it cannot be warranted or represented that it is accurate or complete and it should not be relied upon as such. Also above note is not a recommendation to Buy or SELL and is only a view based on facts and figures and we will be in no way responsible for any losses incurred by anyone who uses this information to either trade or invests securities mentioned herein.