Airtel plans to acquire the promoter's stake in Dish TV; gears up to compete with GigaFiber
Mumbai: Bharti Airtel, which operates DTH platform Airtel Digital, is all set to acquire the promoter's stake in Dish TV, Business Standard reported, quoting unnamed sources.It has been known for some time that Bharti Airtel has been in talks with the promoters of Dish TV for a buyout.The report has confirmed the development that was under speculation in market during the recent past. The big step from Airtel is seen as a proactive move to gear up for a multi dimensional challenge with Jio's Giga Fiber that is likely to redefine the TV and content distribution scenario in the country.
The report said that Bharti Airtel is likely to offer Rs 45-50 per share to buy the promoter stake against the current value of Dish TV shares that are trading at Rs 32.60 on the NSC. The share price surged by 4% on the back of the report. The sale process is part of Dish TV promoter's efforts to raise cash to pay off debts liabilities in their infrastructure businesses.
The bonhomie between Airtel DTH and Dish TV was openly visible in the market through various synergy deals that includes Zee Group TV channels being added to Airtel's DTH platform in the past few days, including channels that were hitherto exclusive to Dish TV, such as Zee Theater.Moreover, Zee and Airtel recently agreed to make content from Zee5 - the group's mobile app - available on Airtel's content apps as well.
There have also been reports on the ground by some DTH distributors that a deal is close at hand.This would be the second big deal involving Dish TV within a space of about a year.A year ago, Dish TV purchased Videocon D2h, becoming the biggest paid DTH platform in the country by number of subscribers.
According to Business Standard, the sale of the promoter's stake in Dish TV would fetch around Rs 4,800 to 5,000 Cr. Bharti Airtel would also need to make an open offer to investors if it acquires the promoter's shares in the company.
The deal will result in Airtel DTH becoming the market leader in DTH space that will result direct competition with Tata Sky and Sun Direct, while the Independent TV yet to find a way out of its financial troubles with Antrix and others. However, increasing popularity of DD Free Dish in rural Hindi-speaking markets (HSM) remains to be a common threat for the entire industry.
A merger with Dish TV will bring an estimated 30 million new DTH subscribers to its fold, and give it heft in its battle with Jio. In rural areas, the merger can also help reduce the overall cost of operations for the DTH player, helping the combined entity eek out a profit even at the 100-rupee-per-month average subscriber revenue levels that the industry is grappling with at present.
On the other hand, the emerging trend of cord cutting after the introduction of NTO and consumers preference switching towards Video-on-demand backed by the rapid expansion of high-speed internet services in India, is another important threat is likely to hamper the growth of DTH industry.
Booming volume of subscribers towards apps like Hotstar, Netflix, Amazon Prime, Jio Cinema, ALTBalajihas thwarted attempts by DTH players increase their ARPU. Things are expected to get worse with the launch of Jio GigaFiber. It is expected that almost everyone who gets a Jio GigaFiber connection will cut off their DTH and cable services, as GigaFiber comes with a more advanced TV viewing experience, including the ability to rewind programs and catch up on past episodes.
For Airtel, GigaFiber will pose a dual-challenge. Not only will it lead to increased attrition in its DTH business, but it will also hurt its wired broadband service.
Airtel's home broadband service currently has around 2.3 million customers, while its DTH service has around 15 million subscribers.
To protect its customers, Airtel is currently working on a plan to upgrade its DTH set-top-boxes into Android-based smart boxes that will offer features similar to what JioGigaFiber has to offer.On the home broadband front, Airtel is also fast upgrading its users to an all-fiber network from the traditional copper line to reduce costs and remain competitive with GigaFiber.