In a recent development in the world of direct-to-home (DTH) services, Bharti Airtel has announced its ongoing discussions with Tata Group regarding a potential merger of their respective DTH operations. This news comes at a time when the DTH industry is facing significant challenges, including a shrinking subscriber base and increased competition from over-the-top (OTT) content providers. As Airtel and Tata engage in talks to combine Bharti Telemedia and Tata Play, the potential merger could have far-reaching implications for both companies and the industry at large.
A Potential Merger on the Horizon
Bharti Airtel and Tata Group are currently engaged in bilateral discussions to explore the possibility of merging Tata Group’s DTH business, housed under Tata Play Ltd, with Bharti Telemedia Ltd, a subsidiary of Airtel. This strategic move aims to create a structure that is mutually beneficial for all parties involved. With Tata Play leading the DTH market with a subscriber base of 19 million, and Airtel Digital TV boasting 15.8 million subscribers, the merger would significantly impact India’s pay DTH landscape.
As of September 2024, India’s pay DTH subscriber base stood at 59.91 million, reflecting a decline from the previous quarter. This trend is attributed to the shifting preferences of urban consumers towards OTT platforms, as well as the growing popularity of Prasar Bharati’s free DTH service, DD Free Dish, among viewers in smaller towns and remote areas. Against this backdrop, Airtel’s proposed merger with Tata Play could bolster its broadband and entertainment offerings, aligning with its ‘triple play’ strategy, as competitors like Jio seek to integrate telecom, broadband, and content services.
Unlocking Synergies and Overcoming Challenges
Industry experts view the potential merger between Bharti Airtel and Tata Group as a strategic move to unlock synergies amidst a challenging landscape. Karan Taurani, Senior Vice-President at Elara Capital, highlights the cost-related synergies and potential revenue-sharing agreements with broadcasters that could enhance margins for the merged entity. As DTH operators navigate the evolving media landscape, they are also advocating for a reduction in licensing fees, following TRAI’s recommendation to slash fees to 3% of adjusted gross revenues by FY27-end.
Ashok Mansukhani, a media and corporate legal expert, underscores the inevitability of consolidation in the DTH industry, emphasizing the need for government support and regulatory reforms to ensure a level playing field. As the industry adapts to changing consumer preferences and technological advancements, DTH players are exploring new avenues to position themselves as aggregators of services, encompassing linear TV channels, OTT apps, and satellite broadband offerings.
In conclusion, the potential merger between Bharti Airtel and Tata Group signifies a strategic alignment in response to the evolving dynamics of the DTH industry. As the two companies navigate discussions and regulatory considerations, the outcome of this merger could reshape the competitive landscape of India’s pay DTH market, offering new opportunities for growth and innovation in the digital entertainment space.
