In February, Bharti Airtel Ltd announced it would buy out private equity (PE) firm Warburg Pincus’ stake in its direct-to-home television arm. The move will see Airtel acquire the 20% stake of Warburg affiliate Lion Meadow Investment for Rs 1,038 crore (~$141million).

A few days later, Bharti made another announcement. Airtel Digital—A Bharti subsidiary which houses its digital businesses—would acquire a 10% stake in Tata-owned Ferbine Private Ltd for a paltry Rs 50,000 (~$681). Ferbine was incorporated scarcely a month earlier, with the purpose of applying for a pan-India umbrella entity (PUE) licence from India’s central bank.

If successful, Ferbine would be entitled to operate its own nationwide retail payments system. This could provide fresh impetus to Airtel’s own payments ambitions. It already owns its own payments bank, and has its heart set on becoming a small finance bank in the future.

Seen in isolation, the two moves seem largely unrelated. In truth, however, they are part of a larger plan—a mammoth restructuring effort that Airtel believes is necessary to keep pace with its younger but larger rival, Reliance Jio.

Last year, even as the world was reeling from the unceasing creep of the Covid-19 virus, Reliance Jio stole a march on its rivals. Jio Platforms—its digital holding company—attracted around $21 billion in investments from a slew of marquee backers. Tech titans like Facebook and Google, sovereign wealth funds like Abu Dhabi-based Mubadala, and PE firms like Silver Lake and General Atlantic all queued up for a share of Jio Platforms.

Jio Platforms was a game-changer. It showed the sort of riches that a telco could unlock by monetising its digital assets. For context, while Bharti Airtel stands valued at 7X its Ebitda Ebitda Ebitda Earnings Before Interest, Taxes, Depreciation, and Amortization , Jio Platforms’ valuation stood at 10-12X its Ebitda.

Bharti wants to replicate this. In an interview to the Economic Times Economic Times The Economic Times Sunil Mittal looks to make digital unit a parallel company to Airtel Read more —published barely a week before the Warburg Pincus stake acquisition was announced—Bharti chairperson Sunil Mittal indicated as much. He said that the company was planning to spin Airtel Digital out of the telecom entity. Standing in parallel to the telco, with both likely housed under a step-up company, it could potentially emulate Jio Platforms’ appeal to investors, and potentially even list publicly a few years down the line.

Appreciation

The markets reacted positively to Mittal’s plan. At Rs 593.80 ($8), the company’s shares closed 1.2% higher on the Bombay Stock Exchange.

AUTHOR

Pratap Vikram Singh

Pratap is based out of Delhi and covers policy and myriad intersections with the other sectors, most notably technology. He has worked with Governance Now for seven years, reporting on technology, telecom policy, and the social sector.

View Full Profile

Available exclusively to subscribers of The Ken India

This story is a part of The Ken India edition. Subscribe. Questions?

MOST POPULAR

Annual Subscription

12-month access to 200+ stories, archive of 800+ stories from our India edition. Plus our premium newsletters, Beyond The First Order and The Nutgraf worth Rs. 99/month or $2/month each for free.

Rs. 2,750

Subscribe
 

Quarterly Subscription

3-month access to 60+ new stories with 3-months worth of archives from our India edition. Plus our premium newsletters, Beyond The First Order and The Nutgraf worth Rs. 99/month or $2/month each for free.

Rs. 1,750

Subscribe
 

Single Story

Instant access to this story for a year along with comment privileges.

Rs. 500

Subscribe
MOST POPULAR

Annual Subscription

12-month access to 150+ stories from Southeast Asia.

$ 120

Subscribe
 

Quarterly Subscription

3-month access to 35+ stories from Southeast Asia.

$ 50

Subscribe
 

Single Story

Instant access to this story for a year along with comment privileges.

$ 20

Subscribe

Questions?

What is The Ken?

The Ken is a subscription-only business journalism website and app that provides coverage across two editions - India and Southeast Asia.

What kind of stories do you write?

We publish sharp, original and reported stories on technology, business and healthcare. Our stories are forward-looking, analytical and directional — supported by data, visualisations and infographics.

We use language and narrative that is accessible to even lay readers. And we optimise for quality over quantity, every single time.

What do I get if I subscribe?

For subscribers of the India edition, we publish a new story every weekday, a premium daily newsletter, Beyond The First Order and a weekly newsletter - The Nutgraf.

For subscribers of the Southeast Asia edition, we publish a new story three days a week and a weekly newsletter, Strait Up.

The annual subscription will get you complete, exclusive access to our archive of previously published stories for your edition, along with access to our subscriber-only mobile apps, our premium comment sections, our newsletter archives and several other gifts and benefits.

Do I need to pay separately for your premium newsletters?

Nope. Paid, premium subscribers of The Ken get our newsletters delivered for free.

Does a subscription to the India edition grant me access to Southeast Asia stories? Or vice-versa?

Afraid not. Each edition is separate with its own subscription plan. The India edition publishes stories focused on India. The Southeast Asia edition is focused on Southeast Asia. We may occasionally cross-publish stories from one edition to the other.

Do you offer an all-access joint subscription for both editions?

Not yet. If you’d like to access both editions, you’ll have to purchase two subscriptions separately - one for India and the other for Southeast Asia.

Do you offer any discounts?

No. We have a zero discounts policy.

Is there a free trial I can opt for?

We don’t offer any trials, but you can sign up for a free account which will give you access to the weekly free story, our archive of free stories and summaries of the paid stories. You can stay on the free account as long as you’d like.

Do you offer refunds?

We allow you to sample our journalism for free before signing up, and after you do, we stand by its quality. But we do not offer refunds.

I am facing some trouble purchasing a subscription. What can I do?

Please write to us at [email protected] detailing the error or queries.