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India's Airtel, Dish Eye TV Merger to Cope With RJio

Gagandeep Kaur
3/20/2019
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Disruption is coming to India's direct-to-home (DTH) TV market. Having already caused mayhem in the mobile sector with its low-cost services, Reliance Jio has unnerved India's DTH incumbents with its recent takeovers of Hathway and DEN Network, two cable operators active in the market. The incumbents are desperate to avoid a similar fate of many of India's mobile operators, which disappeared because of RJio's aggressive expansion.

Airtel Digital TV is now thought to be in merger talks with the Essel Group's Dish TV, the market leader. A tie-up between the two companies would create an industry giant, with 39 million customers and about 61% of the market. It should also bolster efficiency and lead to fatter margins. Because it would remove one competitor from the market, it is likely to be welcomed by Tata Sky, the other significant player in this segment, with a market share of about 27%.

The dwindling fortunes of the Essel Group, which has racked up significant debts on infrastructure investments, could be the trigger for the sale of Dish TV. Subash Chandra, Essel's chairman, has hinted he may sell entertainment assets to reduce debts. That would mark a big reversal on the strategy last year, when Dish TV's March acquisition of Videocon d2h made it the biggest player in the sector.


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Essel is not the only player that has driven consolidation. After failing to sell its DTH business to Tata Sky, Airtel sold a 20% stake in Bharti Telemedia, the holding company for Airtel Digital TV, to private equity firm Warburg Pincus for $350 million.

Reliance Jio has already shown just how disruptive it can be. Two years on from its entry into the mobile market, it has not only drastically reduced the cost of data but also gained a market share of 22%, from a starting position of zero. It has already forced the two telecom giants -- Vodafone and Idea -- into a merger to cope with the new market dynamics.

Ongoing consolidation in the DTH market could be pre-emptive move to keep any such disruption at bay, and ensure companies are ready to compete against RJio as sharpens its DTH focus.

— Gagandeep Kaur, contributing editor, special to Light Reading

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