Bharti Airtel to buy back stake in DTH business from Warburg Pincus
Warburg Pincus has agreed to exit its stake in Bharti Telemedia, the direct-to-home (DTH) satellite television services arm of Indian telecom services provider Bharti Airtel, through a share buyback worth INR31.3 billion ($429.5 million) in cash and shares.
The private equity firm paid $350 million for a 20% interest in Bharti Telemedia – comprising a 15% stake held by Airtel and a 5% holding from another Bharti entity – in late 2017. It will receive 36.5 million shares in Airtel priced at INR600 apiece, for a total of INR21.9 billion, plus INR10.4 billion in cash, according to a filing.
The transaction is part of Airtel's strategy to place its customer-facing products, services and businesses under the same holding group. Full ownership of Bharti Telemedia allows Airtel to offer differentiated and converged solutions to customers as part of its "one home" strategy that bundles broadband, digital TV, and mobile services into a single account managed via a dedicated app.
"Airtel was one of the earliest and most profitable investments for Warburg Pincus in India. We are delighted to be back as partners in Bharti Airtel through this transaction. We look forward to capitalizing on the broad-based growth that the company is witnessing across its entire portfolio of businesses, including the digital build-outs," said Vishal Mahadevia, head of India at Warburg Pincus.
The private equity firm's history with Airtel goes back to 1999 when the GP made its first investment in the company, then called Bharti Televentures. It went on to commit $290 million between then and 2001. The GP's 2005 exit for $1.83 billion is credited with helping establish India as a destination for private equity.
Airtel launched its DTH service in 2008. It now offers 645 channels – including 85 high definition channels – to 16.6 million customers through set-top boxes and mobile apps. Airtel claims to be India's largest integrated telecom provider and Africa's second-largest mobile operator with approximately 440 million customers across its operations as of September 2020. Revenue for the 12 months ended March 2020 came to INR875.4 billion.
Airtel has an assortment of subsidiaries with private equity backers. While GIC is a substantial investor in Airtel directly – committing INR50 billion in 2019 – KKR and Canada Pension Plan Investment Board (CPPIB) have stakes in cell tower business Bharti Infratel and The Carlyle Group owns a piece of data center operation Nxtra Data.
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