Merger with Tata Group is at a discussion stage only: Bharti Airtel

Bharti Airtel, in an exchange filing, has confirmed that it is in talks with the Tata Group about a potential merger of Tata Play’s direct-to-home (DTH) business with its subsidiary, Bharti Telemedia Ltd.

"The above is at a discussion stage only," Airtel stated on February 26, following media reports speculating about a possible merger between Tata Play and Airtel Digital TV.

The Airtel-Tata Play merger is reportedly structured as a share swap deal, enabling Airtel to strengthen its non-mobile revenue by bundling telecom, broadband, and DTH services. The deal would also provide Airtel with access to Tata Play’s 19 million subscriber households.

Merger discussions between Bharti Airtel and Tata Play were first reported in October last year, with both businesses currently valued at approximately Rs 6,000-7,000 crore.

Tata Sons, the holding company of the diversified conglomerate, owns a 70 per cent stake in Tata Play. In April, it acquired Singapore-based investment firm Temasek Holdings Pte’s 10 per cent stake for Rs 835 crore ($100 million), valuing Tata Play at $1 billion, down from its $3 billion pre-pandemic valuation.

The Walt Disney Company holds the remaining 30 per cent stake in Tata Play but has been seeking to exit the TV distribution business. This move aligns with its strategy of streamlining its portfolio following the merger of its India media operations with Reliance Jio. Disney inherited its stake in Tata Play through its 2019 mega-merger with Rupert Murdoch’s 21st Century Fox. Prior to the Temasek buyout, Tata Sons had also acquired a minority stake held by Tata Opportunities Fund.

Airtel is likely to acquire Tata Play at a valuation similar to the Temasek deal. Initially, Tata had planned to consolidate its stakes and take the company public, filing IPO documents in 2022. However, the listing was put on hold in August.