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.


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.


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.

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