Why is Bharti Airtel buying back its DTH business from Warburg?

That is correct. In fact, Bharti Airtel will buy back the 20% of its stake in the direct to home or the DTH arm from Warburg Pincus for a total consideration of Rs.3,126 crore. You would recollect that back in the year 2017 Warburg Pincus had acquired the 20% stake in Bharti Telemedia, which is the DTH arm of the Airtel group providing digital media services.

This time around, the deal will be done through the issuance of 3.647 crore shares of Bharti Airtel, the parent company, to Warburg Pincus at a price of Rs.600 per share. In addition, Bharti Airtel will also pay a sum of Rs.1,038 crore in cash. The total value of this pay our to Warburg Pincus would be to the tune of Rs.3126 crore.

The issuance of shares of Bharti Airtel to Warburg Pincus will be done via preferential allotment. A lot has changed in the digital business since 2017 and with the advent of Reliance Jio, the focus of telecom companies has actually shifted to providing the complete end-to-end ecosystem for the users including voice, data, content and media.

The focus of Airtel will be on offering a converged one-home solution this time around. The DTH business buy back fits perfectly into that strategy. Interestingly, Warburg Pincus was one of the early investors in Bharti Airtel, when it was still an emerging company. To that extent, it is like home coming for Warburg Pincus and as the fund admitted, they are more than happy with this arrangement.