Bharti Airtel is looking to sell up to 25% stake in its Digital TV (DTH) venture reports LiveMint, quoting sources, and adding that it is in talks with investors like US-based Liberty Global Inc, among others.
This is definitely an interesting move at a time when the government is enforcing digitization across the country, and forcing customers to choose between the two digital alternatives – DTH and Digital Cable.
In the recent budget, the government has also increased import duty from 5% to 10% on set top boxes to encourage domestic production, and this means that if Airtel wants to import set top boxes, they will be costlier; DTH operators might be subsidising set top boxes to reduce barrier to entry for new customers looking to switch, and given the opportunity that digitisation offers. An unnamed analyst tells Mint that the funds will be utilised to further pay off debts, but it is just as likely that they could be for funding and making the most of the opportunity to acquire customers going forward: given that there is no interoperabiltiy of set top boxes, the propensity for DTH customers to switch once they’ve subscribed to a service is low.
Airtel had reported a DTH subscriber base of approximately 7.9 million in 632 districts in the country in the quarter ending December 31, 2012. Its average cost per user had gone up from Rs 177 in the previous quarter to Rs 186 in the third quarter of this financial year. The company had also reported only minor growth in revenue for its Telemedia business from Rs 952 crores to Rs 956 crores quarter to quarter.
The news of probable sell out of Airtel’s DTH services is also come at a time when the 2G spectrum auction is at an absymal low. Both Bharti Airtel and Vodafone have been facing serious trouble with the DoT regarding the 2G spectrum auctions earlier this year. In February 2013, Bharti Airtel had mooted a plan to launch cross-operator broadband and fixed line network entity. Vodafone had also launched wireline services for businesses in February, this year.
In August last year, Airtel had sought Department of Telecommunication’s permission to launch a Video on Demand for its DTH subscription base.
(with inputs from Nikhil Pahwa)