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Simons Trading Research

Author: simonsg   |   Latest post: Mon, 17 Jun 2019, 9:03 AM

 

SingTel - Bharti Airtel & Warburg Pincus in Talks to Acquire 61% Stake in Pay-TV Operator, Dish TV

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  • SingTel (SGX:Z74), Bharti Airtel (Airtel) and Warburg Pincus are in talks to acquire a 61% stake in pay-TV operator, Dish TV (DTV), the largest pay-TV provider in India. The deal, which would involve making an offer for another 26% stake in the company, is likely to complete in two months with due diligence ongoing. (Source: Economic Times)
  • Post completion, the combined Airtel-Dish TV would be the world’s largest TV distribution company with over 38m subs or a 61% share of India’s direct-to-home (DTH) market.
  • The bulk of the investments are likely to be at the SingTel and Warburg Pincus levels so as not to burden Airtel’s balance sheet, which is highly geared.

Comment

  • Based on the reported offer price of INR50 per DTV share, the total consideration works out to be some INR80bn (87% stake). Including DTV’s debt of INR22.5bn, this translates into an enterprise value (EV) of INR114bn or FY20 EV/EBITDA of 5.1x.
  • We view the deal positively should it materialise, given the significant market share gains (largest pay-TV operator in India) and potential synergies in revenue, content as well as marketing and distribution.
  • Airtel’s Digital TV (ATV) business has 15m subs and is focused on urban centres while DTV is strong in rural areas. This acquisition would further enhance Airtel’s triple play proposition and competitive advantage, allowing it to go one up against rival Reliance Jio (RJIO)’s own triple play pursuit.
  • Rating: NEUTRAL.
  • Target Price: SGD3.09.

Source: RHB Invest Research - 12 Apr 2019

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