Airtel in talks with Liberty Global to sell 25% stake in DTH biz

Telecom Lead Asia: Bharti Airtel is in talks with Liberty Global and a couple of private equity firms to sell 25 percent stake in its direct-to-home (DTH) business.

In fact, Liberty Global is on an acquisition spree. Liberty Global will buy Virgin Media in a deal valued at approximately $23.3 billion.  The merger between Liberty Global and Virgin Media will create the world’s leading broadband communications company, covering 47 million homes and serving 25 million customers across 14 countries. Liberty Global expects the strategic acquisitions expect operating and Capex synergies of approximately $180 million per year upon full integration.

A Reuters report says Liberty Global did not confirm the development. Airtel does not want to comment on speculation.

If Liberty Global is entering the Indian market, it has the potential to revolutionize the Indian pay TV market. It can pump in additional Capex into Airtel’s DTH business. In Q4 2012, Airtel digital TV (satellite) services saw Capex (capital expenditure) of INR 1,351 million.

The Indian cable TV industry’s total subscription revenue is estimated to grow to $6.4 billion by 2020 from $4.2 billion in 2011, according to Media Partners Asia.

The (DTH) industry in India currently has about 30 million subscribers from six DTH operators Dish TV, Airtel Digital TV, Tata Sky, Sun Direct, Reliance Digital TV, Videocon D2H and  DD Direct.

The Indian DTH industry is poised to grow to 60 million subscribers by the end of 2013.

According to Media Partners Asia’s (MPA) annual research report, the DTH subscriber base in India will grow from 2.3 crore in 2010 to 6.4 crore by 2015, and 8.3 crore by 2020. The US is expected to be the second largest DTH market with 3.5 crore active subscribers.

Dish TV leads with the market share of 13.9 million gross subscribers followed by Tata Sky with 9.7 million. Airtel had 8.4 million subscribers as per records for September 2012 and Videocon D2H had 6.6 million subscribers.

At the end of December, Airtel digital TV had 7.9 million customers on its DTH platform, up 12 percent from 7 million a year earlier.

The digital TV business of Airtel posted sales of Rs 428 crore for the quarter ended December, accounting for 3 percent of the company’s total revenue.

Airtel’s average revenue per user in the DTH business increased 16 percent to Rs 186. Airtel DTH service is available in 632 districts across the country.

Earlier this week, Airtel raised $1 billion through an overseas bond sale. The sale was the largest by an Indian telecom company and the money raised will go towards repaying the firm’s high-cost debt. The 10-year unsecured bonds had a coupon of 5.125 percent a year. At the end of the December quarter, Bharti’s total debt was $11.7 billion.

The ongoing digitization initiative is putting pressure on DTH business. The government has mandated cable TV to be digitized in a phased manner across India by 31 December 2014.

The Information & Broadcasting Ministry on Friday said cable digitization achieved 55 percent target in 38 cities in Phase II. The ministry’s target is to achieve 100 percent digitization by March 31, 2013.

As per the data received from the DTH operators and the MSOs, as on 22 February, 2013, 87.7 lakhs Set Top Boxes (STBs) have already been installed in Phase-II cities against the target of 1.60 crore, registering an achievement of 55 percent digitisation. Out of a total of 87.7 Lakhs, DTH connections accounted for 40.7 lakhs, whereas cable STBs accounted for 47.0 lakhs.

Arvind Krishna
[email protected]