Bharti Airtel shares edge higher on merger talks between Tata Play, Airtel Digital TV

Shares of Bharti Airtel rose nearly 1% on Thursday amid reports that the group is in talks with the Tata Group to merge their loss making direct-to-home (DTH) businesses, Tata Play and Airtel Digital TV. The merger is expected to be share swap transaction, in which Airtel will own a majority stake of 52-55%. The Tata Play’s shareholders, including Tata Sons and Walt Disney, will hold the remaining 45-48% shares in the merged entity.

Reacting to the news, Bharti Airtel share price rose 0.6% to hit a high of ₹1,651.25 during the trade so far. Early today, the telecom heavyweight opened flat at ₹1,641.75, after ending 2.5% higher in the previous session. Before that, the telecom stock ended lower for six straight sessions, losing over 7% during February 17-24.

Airtel confirms merger deal

Among ongoing reports of merger of DTH businesses of Tata and Bharti Airtel Group, Bharti Airtel on February 26 confirmed that it is in discussions to explore a potential transaction. The talk is “at a discussion stage only,” it said.

“Bharti Airtel Limited and TATA Group are in bilateral discussions to explore a potential transaction to achieve a combination of TATA Group’s direct-to-home (DTH) business housed under Tata Play Limited, with Bharti Telemedia Limited, a subsidiary of Airtel, in a structure acceptable to all parties,” the release noted.

Tata Play, the country’s largest DTH provider, was originally Tata Sky, a joint venture between Tata Sons Private Limited and TFCF Corporation (formerly known as Twenty-First Century Fox). The Walt Disney Co came on board after it acquired TFCF’s stake in 2019.

Currently, Tata Sons, the group’s holding company, owns a 70% stake in Tata Play, while Walt Disney holds the remaining 30% share in the firm. In April 2024, Tata Sons bought a 10% stake in Tata Play from Temasek Holdings for about $100 million. 

On the other hand, Airtel Digital TV is a satellite TV service provider in India that offers a variety of subscription plans. Currently, it has a base of 15.8 million subscribers.

Post-merger, Airtel will get access to Tata Play’s 19 million homes and half a million broadband customers, which will help the company in its ‘triple play’ strategy of bundling telecom, broadband and DTH services.

If succeeded, this would be second-biggest transaction in the DTH space in about a decade, following the Dish TV-Videocon d2h merger in 2016. Also, this deal comes in the backdrop of Reliance Industries’ completion of the merger of its media business with the India business of global media house Walt Disney to form a new joint venture worth ₹70,352 crore.

Following the mega merger, the Reliance and Disney-Star joint venture (now rechristened JioStar), which owns 120 channels and two streaming platforms, controls 60% of the Indian media and entertainment market.

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