India’s largest mobile operator Bharti Airtel is in talks with John Malone’s Liberty Media over a stake sale in its satellite TV business, according to the Economic Times citing two people familiar with the matter. Previous reports have suggested…
India’s largest mobile operator Bharti Airtel is in talks with John Malone’s Liberty Media over a stake sale in its satellite TV business, according to the Economic Times citing two people familiar with the matter.
Previous reports have suggested that several private equity firms – including KKR, Providence, Bain Capital and GAAP – were also interested in a 25% stake in Airtel Digital TV.
At the time, Bharti was reportedly aiming for a US$1bn valuation for the unit. Given Bharti’s “strong brand”, a media analyst at a leading Indian brokerage previously SatelliteFinance that the telco should be able to get that valuation.
However, according to the local newspaper, Bharti now values its DTH subsidiary at closer to US$1.5bn and therefore a strategic player with deep pockets might be a more likely investor.
With a US$12.71bn debt load and declining revenues, Bharti Airtel is exploring ways of strengthening its balance sheet. It recently sold a 5% stake in itself to Qatar Foundation Endowment for US$1.26bn and consolidated its position in Uganda and Bangladesh via stake purchases.
In early June, it was also rumoured to be considering a sale of minority stakes in its landline and enterprise businesses.
Bharti and Liberty Media were not immediately available for comment.
India is home to six DTH operators – Videocon D2H, Dish TV, Tata Sky, Sun Direct, Airtel Digital TV, and Reliance Digital TV – and most of them are looking to bring in investors to remain competitive in this crowded market.
Both Reliance Digital TV and Sun Direct have been contemplating M&A deals, while Tata Sky and Videocon are eyeing IPOs.
Analysts expect most of those assets to be snapped up by foreign investors following the government’s decision in September last year to increase the foreign direct investment (FDI) limit in satellite pay-TV companies from 49% to 74%.
The FDI limit for telecoms companies was recently increased to 100% and there has been speculation that the government may follow a similar line for DTH operators.
Rohan Dhamija, head of India and South Asia at Analysys Mason, recently said he believes cash-intensive DTH platforms will become particularly profitable in the future as the number of subscribers grows further.
According to the Telecom Regulatory Authority of India (TRAI), the number of DTH subscribers in the country stood at 54.5 million in May 2013 and this figure is expected to increase to 76.6 million in 2020, based on a Media Partners Asia report.
