Tata Play and Airtel Digital TV move closer to merger

New Delhi: Tata Play and Airtel Digital TV are reportedly in the final stages of negotiating a merger. 

News reports quoting sources mentioned that the deal, structured as a share swap, is nearing completion, with Bharti Airtel poised to take a majority stake of 52-55% in the combined entity, while Tata Play’s shareholders, including Tata Sons and Walt Disney, will retain 45-48%.

The merger comes as the DTH sector grapples with mounting challenges, including a sharp decline in subscribers due to the rise of over-the-top (OTT) streaming platforms and competition from free services like DD Free Dish. 

Tata Sons, the parent company of the conglomerate, holds a 70% stake in Tata Play after purchasing Singapore-based Temasek Holding Pte's 10% stake for Rs 835 crore ($100 million) in April. 

The Walt Disney Company holds a 30% stake in Tata Play but has been looking to exit the TV distribution business after the formation of JioStar. 

Tata Play, India’s largest DTH provider, was initially known as Tata Sky and started as a joint venture with Rupert Murdoch’s News Corp. In 2019, The Walt Disney Company acquired Murdoch’s 21st Century Fox, subsequently taking over its stake in the venture.

Airtel is reportedly acquiring Tata Play for a price similar to what Temasek paid for its stake. 

Tata's original plan was to consolidate its holdings and take Tata Play public, even filing IPO documents in 2022. However, the listing was put on hold last August, and now it appears Airtel will be the new owner.

Industry analysts estimate that the combined entity will serve approximately 35 million paid subscribers—drawn from Tata Play’s 19 million and Airtel Digital TV’s roughly 16 million—as of September 2024. 

Together, their FY24 revenue exceeded Rs 7,000 crore, though both companies have faced financial strain, with Tata Play reporting a quadrupled loss of Rs 433 crore last year.

News reports stated that the operational hurdles remain, notably the differing satellite infrastructures—Tata Play uses GSAT, while Airtel relies on SES—which could complicate integration and cost synergies.  Past mergers, like Dish TV’s with Videocon d2h, have faced similar challenges, leading to customer churn. 

Neither Bharti Airtel nor Tata Sons has officially commented on the merger, but sources indicate an announcement could come within weeks.