Bharti has another bash at buying Dish TV

Bharti Airtel is reportedly holding early talks to acquire control of Dish TV India almost two years after a previous takeover attempt fell apart.

Should it succeed this time around, Bharti would end up with a hefty market share in TV – it would control half of India’s satellite TV business, according to business publication Mint, which broke the story – but a raft of complexities could stand in the way of any deal.

According to the news outlet, the Indian telco is holding talks with Subhash Chandra, founder of the Essel Group, which itself launched Dish TV the best part of 20 years ago. Meanwhile, EY has pulled together a due diligence report on the TV provider for Bharti, one of its sources said. Apparently, if Chandra approves the deal he will then make a recommendation to the Dish TV board, which will formulate its own opinion on the matter.

As it stands, Dish TV does not seem to be involved. In a filing to the BSE, Dish TV said it is “not aware of the transaction” being discussed in the media. There is nothing official from Bharti as yet.

Bharti has offered 20 rupees per share (US$0.27) for Dish TV, a 16% premium on its closing price on Wednesday, Mint said, without elaborating on what the total purchase price might look like. That figure refers to the 5.93% of the company held by its promoter group, it explained. Should it be successful with that part of the deal, Bharti would then reach out to Dish TV’s biggest shareholder Yes Bank, with a 25.63% stake, and subsequently to other shareholders. Its aim is to acquire 51% of the company, the sources said.

The support of Yes Bank will be vital for the deal to progress, the report noted, adding that a Yes Bank spokesperson said it has not had any discussions with Bharti.

But Yes Bank is where this whole thing gets extremely complicated. The bank’s relationship with Dish TV is fragile at best, beset by boardroom drama and legal proceedings. MoneyControl explains the details pretty well here, for those interested in the ins and outs of the situation, but otherwise suffice to say that the bank had its voting rights in Dish TV frozen by the police, a move that the Supreme Court put a stop to earlier this week, due to allegations made by Essel Group’s Chandra against Yes Bank. Chandra claims that the bank effectively forced him to merge Dish TV with Videocon D2H – the tie-up closed in early 2018 – by threatening to recall a hefty loan.

Yes Bank itself gained its shares in the TV provider as a result of defaulted debts on the part of its promoters, which is never a great foundation for company ownership.

There is more to the story, but the upshot is that brokering a deal against this backdrop could be a tough ask for Bharti.

And it has faced difficulties in its dealings with Dish TV before. A previous bid to acquire the business fell apart last year when the parties involved failed to agree a price tag.

A Business Standard report at the time indicated that Bharti was keen to snap up the company to boost its presence in the DTH TV market as part of its strategy of competing with Reliance Jio, which has been fairly aggressive in its fibre rollout.

Back then, a merger would have given Bharti a DTH market share of about 55%, which is much the same as it would today, and equates to a pretty solid base for cross-selling, amongst other things.

Bharti clearly has a lot to gain from this deal, but it will not be an easy one to ink.