Bharti Airtel said on Wednesday that it is in discussions with the Tata Group about possibly merging their DTH businesses. For a some now, the two parties have been discussing combining Bharti Telemedia and Tata Play. This occurs while the DTH sector is struggling with a declining subscriber base and increased competition from over-the-top (OTT) providers.
“Bharti Airtel Ltd and Tata Group are in bilateral discussions to explore a potential transaction to achieve a combination of Tata Group’s Direct To Home business housed under Tata Play Ltd, with Bharti Telemedia Ltd, a subsidiary of Airtel, in a structure acceptable to all parties,” Airtel said in a regulatory filing.
With 19 million members, Tata Play is the biggest DTH provider in the nation. There are now 15.8 million customers to Airtel Digital TV. According to data given by the Telecom Regulatory Authority of India, the number of pay DTH customers in India was 59.91 million as of September 2024, a decrease from 62.17 million in June 2024. Dish TV and Sun Direct are two of the four pay DTH providers in the nation at the moment. While more and more urban consumers are switching to over-the-top (OTT) subscriptions, Prasar Bharati’s free DTH service, DD Free Dish, is attracting customers in more rural and small towns.
At a time when Jio is seeking to combine telecom, internet, and content into a one bundle, the planned merger will help Airtel’s broadband and entertainment capabilities. The agreement is anticipated to strengthen Airtel’s “triple play” strategy and increase its non-mobile income. According to experts, Tatas would benefit from the deal by joining the wider network, as independent DTH providers are encountering challenges. After the latter sold its mobile services, Tata Indicom, in 2019, this would be the second significant agreement between Bharti Airtel and the Tata Group, if it proceeds.
“Both the DTH and digital cable industry is witnessing challenges and seeing a reduction in subscriber base due to competition from OTT players. If this transaction goes through, this consolidation will unlock synergies for the two players. Besides cost-related synergies, there could also be synergies in terms of revenue-share agreements with broadcasters. This will lead to better margins for the merged entity,” said Karan Taurani, Senior Vice-President, Elara Capital.
Additionally, DTH players are requesting a decrease in licensing prices at the time of the discussions. In reality, TRAI has suggested that the DTH industry’s licensing cost be reduced from the current 8% of adjusted gross sales to 3% and then eliminated by the end of FY27. The sector is dealing with a kind of double whammy. While more urban consumers are switching to over-the-top (OTT) subscriptions, Prasar Bharati’s free DTH service, DD Freedish, is attracting customers in more rural and small towns.
Media and corporate legal expert Ashok Mansukhani said, “Given the challenges, the consolidation in the DTH industry is inevitable. The industry needs support from the government in terms of a level playing field and TRAI’s recommendations should be implemented. DTH industry will increasingly need to position itself as an aggregator of services including linear TV channels, OTT apps and satellite broadband among others.”
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