India’s Direct-to-home (DTH) industry is set for extensive transformation with Tata Play and Airtel Digital TV planning to merge through a share swap arrangement. This consolidation is anticipated to happen while DTH market is expecting more digital streaming.
Airtel plans to retain controlling stake of 52-55 percent owing majority control and Tata Play shareholder’s Disney and others retaining the rest 45-48 percent. This consolidation will enable Tata Play’s 19 million subscribers to better utilize Aritel’s services, thus positioning Ominchannel closely with MBDs of telecom, broadband and DTH.
This merger attempt comes in the wake of further expected consolidation of other industry players post 2016 Dish TV and Videocon d2h merger, as well as Reliance Industries with Disney Star India’s merger with Viacom18 and creation of JioStar, India’s largest media conglomerate, earning 26,000 crores for the first time in FY24.
Both Airtel Digital TV and Tata Play are pegged at a valuation of Rs 6000-7000 crore each. Airtel Digital TV is currently a part of the Bharti Telemedia Pvt Ltd, which is a fully owned company of Bharti Airtel.
After increasing its stake in Tata Play by Temasek Holding’s 10% in April 2024 for Rs 835 crore, Tata Sons now owns 70% and puts the valuation of Tata Play at 1 billion dollars, which is a significant drop from the pre-pandemic value of 3 billion dollars. It is anticipated that Disney will continue to hold its stake in the new company and therefore, its ability to control a portion of the Indian DTH market will not be affected.
In addition, the merger will result in a total of 35 million subscribers which will generate revenue in excess of Rs 7000 crore during FY24. Also, Tata Play’s other 500,000 broadband customers would be added to improve Airtel’s bundled services.
This merger has the potential to redefine the subscription model in India’s DTH industry by diversifying the customer base and increasing price competition as well as bundling services. It is anticipated that an agreement will be reached soon, meaning that the rest of the industry will have to brace for impact in India’s television distribution and streaming industries. As the media and entertainment industry in India consolidates, this acquisition further breaks the barrier between traditional television broadcasters and digital OTT players.