Next wave of DTH consolidation imminent as Jio GigaFiber readies for launch

The next wave of consolidation in the direct-to-home (DTH) market could be in the offing this year as Jio GigaFiber readies for commercial launch. The last round of consolidation was triggered in 2017, when Dish TV merged with Videocon d2H, and Reliance Big TV was acquired by Delhi-based Veecon Media and Television.
 
In the past few days, the buzz around Bharti Airtel’s interest in Dish TV, the country’s largest DTH operator, has only grown, prompting furious activity at the Dish TV counter on the bourses. Tata Sky and Airtel DTH are the second- and third-largest players, respectively.
 
On Thursday, when speculation about Airtel DTH looking to merge with Dish TV first began, the Essel group company’s stock price touched an intra-day high of Rs 41 on the BSE, with trading activity jumping over 2.65 times. It finally settled at Rs 39.05 per unit, which was also the range in which it closed trade on Friday.
 
Airtel, along with partner Singtel, is considering buying the promoter stake in Dish TV, which stands at 60 per cent, for over Rs 6,000 crore. Over 80 per cent of the promoter stake in Dish TV is pledged to investors.
 

Even as investor activity in the Dish TV stock grows after the Airtel buzz, talk about Tata Sky scouting for new financial investors has been increasing of late as it strives to build a war chest to take on Jio.
 
Jio’s fibre broadband network is expected to commercially roll out by the second half of this year. Temasek and Tata Opportunities Fund, who together own 19 per cent of Tata Sky, are looking to exit, prompting the latter to seek new investors, industry sources said. Tata Sky is majority-owned (51 per cent) by Tata Sons and 30 per cent by Walt Disney Co, who last month completed the acquisition of 21st Century Fox, the previous 30 per cent owner of Tata Sky. The integration of the Indian units of Walt Disney and 21st Century Fox is underway. Mails sent to Airtel, Dish TV and Tata Sky on Friday elicited no response.
 
Jio GigaFiber, said persons in the know, is live on a preview basis in cities such as Mumbai, Delhi-NCR, Ahmedabad, and Surat as Reliance tests the service in select markets. Reliance, it is learnt, is also offering connection speeds of up to 100 megabytes per second as part of its GigaFiber service, with the data download limit capped at 100 GB. Users also have to pay a refundable amount of Rs 4500 for the high-speed router. Additionally, Reliance is also expected to use the last-mile connectivity of cable companies Den and Hathway, whose acquisition was completed last month, to push its fibre broadband service.
 
“DTH players face a twin challenge,” says Abneesh Roy, senior vice-president, research, institutional equities, Edelweiss. “One is a content challenge thanks to over-the-top players who’ve been driving up viewership in the last few years. The second is a distribution challenge. DTH players do not provide internet services, which put them at a disadvantage compared to other distribution platform operators,” he says.
 
Karan Taurani, vice-president, research, Elara Capital, says domestic DTH operators have lost the pricing advantage they had prior to the Trai pricing regime. “Earlier, DTH players would position themselves at a premium to cable companies in terms of level of service and pricing,” he says.
 
Tata Sky has challenged the Trai tariff order in the Delhi High Court along with players such as Airtel DTH, Sun Direct, and broadcaster Discovery Communications.