You are here: Home » Companies » News
Business Standard

Carlyle joins the race for Airtel Digital TV stake

Bharti Airtel plans to dilute about 20% stake in its DTH business to raise about $200 mn

Reghu Balakrishnan  |  Mumbai 

With a number of private equity players evincing interest in Bharti Airtel's direct-to-home business (DTH) Airtel Digital TV, competition among bidders for a stake in the DTH arm has intensified.

According to informed sources, US-based private equity (PE) giant Carlyle is in early-stage discussions with Bharti Airtel to acquire a minority stake in Airtel Digital TV.

Other PE majors that are already in the fray include KKR and Bain Capital. Bharti Airtel plans to dilute about 20 per cent stake in its DTH business to raise about $200 million. It targets a valuation of $1 billion for the DTH arm. As of December 2012, Airtel Digital TV had 7.9 million digital TV subscribers.

According to people in the know, Carlyle plans to invest in Airtel DTH through its buyout fund Carlyle Asia Partners. Carlyle is raising $3.5 billion for its fourth buyout fund, Carlyle Asia Partners IV.

Simultaneously, Carlyle is also engaged in discussions to buy minority stake in Lafarge India for $250-300 million.

A Carlyle spokesperson said, "As a policy, Carlyle does not comment on market speculations."

An email questionnaire sent to Airtel spokesperson did not elicit any response.

PE funds' attention turned to the DTH space after India decided to increase the foreign direct investment limit in DTH and digital cable from 49 per cent to 74 per cent.

According to a Media Partners Asia report, the domestic DTH market would grow three times to more than $5 billion by 2020. The mandatory cable TV digitisation would help DTH players expand their subscriber base in India, the report said.

The DTH industry's revenues will touch $3.9 billion by 2017 and $5.3 billion by 2020, the report noted. The Indian DTH industry is estimated to have clocked revenues of about $1.5 billion in 2012. The active DTH subscriber base is estimated to grow from 32.4 million in 2012 to 63.8 million by 2017 and 76.6 million by 2020.

Aneesh Vijayakar, partner, KPMG India, said, "The mandatory digitisation has created an interesting tussle between DTH and digital cable players. As part of this digitisation, in both these segments are vying to maintain their existing subscriber base as well as increase market penetration. Accordingly, sourcing capital is priority for in the distribution space."

As part of sourcing fresh capital, another DTH player, Videocon, is also in the market to float an initial public offer (IPO) for Bharat Business Channel group's DTH arm. It has received the approval of the Securities and Exchange Board of India (Sebi) for its proposed Rs 700-crore IPO. According to reports, Tata Sky also plans to tap the IPO market to raise about Rs 2,000 crore by diluting 25 per cent stake.

PE investors need to consider if DTH will be able to add equal or more subscribers than digital cable over the next four-five years.

Some of the DTH players are also reporting Ebitda (earnings before interest, taxes, depreciation and amortisation) break-even, which may make them attractive now from an investor's perspective, because valuations may only become more expensive, Vijayakar of KPMG added.


* DTH industry revenues to reach $5.3 billion by 2020, from $1.5 billion in 2012

* Subscriber base to grow 76.6 million by 2020, from 32.4 million in 2012

* Tata Sky and Airtel Digital TV have 19% and 18% market share, respectively

* Tata Sky, Airtel, Videocon & Dish TV accounted for 88% of additions in 2012

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Thu, April 25 2013. 00:36 IST