Warburg to pick up 20% in Airtel DTH

Global private equity firm Warburg Pincus will acquire up to a 20 per cent stake in Airtel’s DTH arm Bharti Telemedia for $350 million. This will be the second innings for Warburg to invest in a Bharti Group entity.

Bharti Telemedia is among the largest in the over 65-million direct-to-home (DTH) paid subscriber market in the country. With around 14 million subscribers, Airtel’s DTH service holds a 21 per cent market share, the latest data from the Telecom Regulatory Authority of India (Trai) suggests. Dish TV leads the market at 24 per cent, followed by TataSky at 23 per cent, Airtel 21 per cent, Videocon 20 per cent, Sun Direct 10 per cent and Reliance Communications 2 per cent.

Bharti Telemedia, under the Airtel TV brand, reported revenues to the tune of $550 million during the 12-month period ended September 30, 2017.

Of the 20 per cent to be acquired by Warburg, 15 per cent will be sold by Bharti Airtel and the balance by another Bharti entity which holds a 5 per cent stake. The proceeds will be used to fund growth plans as the company looks to strengthen its hold in the country's DTH market, which is in the midst of consolidation.

Reliance Communications has already announced sale of its DTH arm to Pantel Technologies and Veecon Media and Television.

Last year, Zee Group owned Dish TV had announced merger of its business with Videocon d2h, which is pending before the Information and Broadcasting Ministry for approval.

After the transaction closes, Airtel will own 80 per cent equity stake in Bharti Telemedia.

Warburg had earlier invested $292 million in Bharti TeleVentures for a 19 per cent stake between September 1999 and July 2001.

When Airtel went public in January 2002, the Warburg stake was diluted to 15 per cent. The firm sold its entire stake in Airtel in three tranches during 20042005 for a total realization of $ 1.61 billion. Airtel TV, launched in 2008, has over 1,500 partners and more than 158,000 recharge outlets across the country. It is led by Sunil Taldar, who joined as CEO in 2016.

Gopal Vittal, MD & CEO (India & South Asia), Bharti Airtel, said, “Airtel has enjoyed a very successful partnership with Warburg Pincus in the past and we are excited to partner with them once again in an attractive and fast growing space.”

The Airtel board has approved the transaction, which is subject to regulatory approvals. As part of the transaction, Viraj Sawhney, Managing Director, Warburg Pincus India, will join the board of Bharti Telemedia.

Vishal Mahadevia, Managing Director and CoHead, Warburg Pincus India, said, “The Indian Digital TV market is expanding rapidly and we believe that Airtel DTH is well positioned to capitalize on incremental growth… We are pleased to be working alongside Sunil Bharti Mittal and the Bharti group again following our successful partnership many years ago.”