Tata Play Limited, the direct-to-home (DTH) television service under Tata Sons, is facing serious business challenges. The company’s losses widened by 44% in FY25, reaching Rs 510 crore, compared to Rs 354 crore in the previous year.
Additionally, its operating revenue dropped by 5.46%, falling from Rs 4,305 crore to Rs 4,082 crore, according to a recent report by Crisil Ratings, which also warned that this downward trend could continue into the next year.
Crisil Ratings stated in its rationale report released on May 19, said, “Operating revenue is expected to remain flat in fiscal 2026 after a de-growth of 5% in fiscal 2025, largely due to a declining subscriber base.”
Despite the losses, Crisil reaffirmed the company’s ‘Crisil AA/Stable/Crisil A1+’ ratings for its Rs 8,000 crore bank facilities, highlighting its financial backing and continued support from Tata Sons. Tata Play remains a major player in India’s DTH industry. As of September 30, 2024, it held a 31.99% market share, the largest among DTH providers, with a strong base of HD customers, according to data from the Telecom Regulatory Authority of India (TRAI).
However, the overall number of active DTH subscribers in India has dropped significantly. By December 2024, the number fell to 58.22 million, down from 62.17 million in June a loss of nearly 3.95 million subscribers in just six months.
Notably, Tata Play’s own subscriber base declined 5.39% year-on-year, falling to 20.15 million by the end of FY24. Other DTH players like Dish TV and Sun Direct also reported losses, while Airtel Digital TV was the only major provider to show growth, gaining 1% to reach 17.63 million subscribers.
Crisil attributed this decline to rising competition from free TV services like DD Free Dish and the increasing popularity of over-the-top (OTT) platforms such as Netflix, Amazon Prime Video, and Disney+ Hotstar. DD Free Dish, run by Prasar Bharati, provides free-to-air channels and does not pay the 8% license fee required of DTH providers, making it more attractive to cost-sensitive users. This has put traditional DTH operators like Tata Play at a disadvantage.
Furthermore, Tata Play’s merger talks with Airtel Digital TV, which could have helped consolidate operations, fell through on May 3 after both sides failed to agree on terms. Crisil noted that both Tata and Airtel have asked the government to restrict DD Free Dish to broadcasting only Doordarshan channels, aiming to level the playing field.
Crisil said, “Tata Sons views Tata Play as a strategic subsidiary and has expressed strong support. It will maintain a majority stake in the company.”
Tata Play is also involved in a legal dispute with the Ministry of Information and Broadcasting (MIB) over how license fees are calculated. In 2020, the MIB demanded extra fees based on its interpretation of Adjusted Gross Revenue (AGR).
As of March 31, 2024, Tata Play had set aside Rs 2,002 crore in provisions and marked Rs 2,280 crore as contingent liabilities. While provisional licenses valid for 20 years were issued from April 1, 2021, the final verdict is still pending. To ease financial strain on DTH players, TRAI recommended reducing the license fee from 8% to 3% of AGR in August 2023, with plans to eventually remove it by FY27.
Interestingly, Tata Play’s broadband division and OTT platform, Tata Play Binge, are expected to help cushion the losses. Crisil noted that price hikes helped maintain margins, with EBITDA at 42% in FY25, up slightly from 41% in FY24.
Crisil said, “Operating margins are likely to face pressure as the subscriber base moderates further. However, improving performance of Tata Play Binge and broadband services should help offset the decline.”
Debt metrics also improved, with the adjusted debt-to-EBITDA ratio falling from 2.3x in FY24 to 2.1x in FY25, a sign that Tata Play is making some headway in managing its financials. While Tata Play still leads the DTH market, it is clearly feeling the heat from free TV services and digital streaming platforms. Its future success may depend heavily on regulatory changes, the growth of broadband and OTT offerings, and its ability to retain and regain subscribers in a rapidly changing entertainment landscape.