The entry of Reliance Jio started a wave of consolidation in the telecom industry. Major operators like Bharti Airtel and Vodafone Idea have been trapped in a bruising tariff war following the entry of Reliance Jio backed by India’s richest man Mukesh Ambani. Jio’s free voice, cheap data and regulatory decisions made these operators lose their financial hold. In such a scenario, to withstand the competition Bharti Airtel has come up with a new step in the telecom industry.
SingTel, a Singapore based telecom which holds around 35% stake in Bharti Airtel is a major promoter entity of Airtel and will be soon acquiring more than 50% making Airtel the first private telecom service provider a foreign entity.
Bharti Telecom is the single largest shareholder in Bharti Airtel with a 41% equity stake. 52% stake in Bharathi telecom is held by Sunil Bharathi Mittal and his family. This was done to meet the debt which stood at Rs. 1,16,645.8 crore on June 30, 2019, of Bharti Telecom Ltd (promoter of Bharti Airtel Ltd). By the investment of SingTel, it was able to raise the foreign stake from 43% to 85%. Due to the clarity issues on the foreign investor, this is the second time Bharti Airtel has applied for the 100% FDI approval. Despite the debt obligations, intense market competition forces telecom operators to make more investments in the infrastructure and network. To beat the competition from Reliance Jio who recently took a major stake in the two largest cable operators-Hathway cable and Datacom and DEN Networks, Bharti Airtel with SingTel has made a strategy to merge with Dish Tv. The deal price will be Rs.55 per share and they are looking to acquire a 60% stake in Dish Tv for around Rs.615 crore. Airtel had tried to sell its DTH business to Tata Sky but was not able to make up to an agreement. It all started with the merger of Dish Tv with Videocon d2h itself where Indian DTH space is building up. Dish TV combined with Videocon d2h leads with a 37% market share and Airtel Digital TV with a 24% share. It has been decided a partial stake sale in Essel Group-owned Zee Entertainment Enterprises (ZEE) and a formal announcement is expected with the merging of DTH with private equity firm Warburg Pincus and Essel Group-owned Dish TV. This revenue merger makes both businesses to run together as a single unit with respective shareholders. To meet the debt Essel Group sells its asset where it holds 57.52% stake in Dish TV and 95% is pledged with lenders.
If the merger takes place it will become the largest merger and acquisition in the industry. After this, on a positive note, Airtel Digital TV and Dish TV together will hold a 61% market share in India. This will give a notified concern for Reliance and makes the industry more competitive. Airtel will surely become the world’s largest distributor in terms of digital tv after the merger.
OFFICIAL MEDIA PARTNER: NEWSWIRE
OFFICIAL PROMOTIONAL PARTNER: IBS MESSENGER
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