Dish TV in talks to acquire Videocon DTH for $1 billion

MUMBAI: Dish TV, the Asia’s largest direct-to-home (DTH) entertainment company and part of the Subhash Chandra-led Essel Group, is in talks to buy out the high-tech Videocon’s DTH business in a deal that could reach $1 billion (about ₹6,700 crore)in its valuation, sources said.

Reacting to the news, Videocon Industries ‘ stocks reached a high of ₹107, where it saw volumes of 75,000 shares changing hands, before closing down 0.3% at ₹104.55. Shares of Dish TV saw its stock surge to the day’ s high of ₹101.95 before falling by 1.6% to end at ₹ 98.65.

The talks have been initiated by lenders of Videocon, who are worried about the faltering growth of the conglomerate’ s varied businesses, to service debt, which currently stands at about ₹43,000 crore, people familiar with the development said.

When contacted, Jawahar Goel, MD of Dish TV, denied any such possibility saying it was speculation. “I don’t think there is any such move. Consolidation in the DTH business will happen, but it will take time, at least six months to a year,” he said.

Videocon Industries chairman Venugopal Dhoot also denied the news .“There are no such plans .”

For Dish TV, the deal will fill gaps in various sections of its DTH market, specially in high-definition segments where Videocon DTH has managed to corner with its superior technology. Videocon’s value-added services bouquet can bring in 12-17% of additional revenue. It will also boost the average revenue per user (ARPUs) for Dish TV, the crucial metric of its business has recently started stagnating .

Videocon D2H’ s ARPUs for the year ended March 31 stood at ₹207 against Dish TV’s ARPUs of ₹174.

The move is crucial as more people make the switch from analog to digital. According to an Essel Group internal presentation, about 191 million TV households in India will go digital from 96 million in 2015. Since the DTH business is a volumes game, garnering a large subscriber base is earnings accretive as ARPUs typically stagnate at a little over ₹300 per subscriber.

Dish TV, the first DTH player, has 14.5 million subscribers, while Video con has 11.86 million, and competitor Tata Sky has about 10 million .

“Talks over valuations may take time as Videocon DTH is a Nasdaq-listed business, and hence has larger expectations,” said a person familiar with the matter.