Bharti Airtel shares are expected to be in focus on Thursday after the company confirmed ongoing talks with the Tata Group about merging Tata Play, its direct-to-home (DTH) business, with Bharti Telemedia, a subsidiary of the Sunil Mittal-led telecom operator.

“Bharti Airtel and Tata Group are in bilateral discussions to explore a potential transaction to achieve a combination of Tata Group’s DTH business housed under Tata Play Ltd, with Bharti Telemedia Ltd, a subsidiary of Airtel, in a structure acceptable to all parties. The above is at a discussion stage only”,  Airtel said in an exchange filing.

ET reported on Tuesday that the Tata and Bharti groups are finalizing a merger between their loss-making DTH businesses, Tata Play and Airtel Digital TV, especially at a time when consumers are rapidly migrating to digital platforms for video consumption and live streaming.

ET further reported that the proposed merger would happen through a share swap and help boost Airtel’s non-mobile revenues through convergence.

According to the ET report, Airtel will hold a majority stake of around 52-55% in the combined entity, while Tata Play shareholders, including Walt Disney, would hold 45-48%. The combined entity is likely to be run by Airtel’s senior management, although Tata is reportedly seeking two board seats, the ET report added.

Both DTH operations are being valued more or less equally at around Rs 6,000-7,000 crore, according to the ET news report.

Airtel shares were up 2.55% to Rs 1,641.60 in late afternoon trade on the BSE on Wednesday.

Tata Play, formerly known as Tata Sky, is India’s largest DTH provider and was initially a joint venture with Rupert Murdoch’s News Corp. When Murdoch’s 21st Century Fox was acquired by The Walt Disney Co. six years ago, Disney took over that stake.

According to an ET report, Airtel will gain access to Tata Play’s 19 million subscribers, supporting its "triple play" strategy of combining telecom, broadband, and DTH services.

This potential deal would be the second significant transaction in the DTH sector in nearly a decade, following the Dish TV-Videocon d2H merger in 2016. It also coincides with the merger of Star India and Viacom18 by Reliance Industries and Walt Disney, forming JioStar, India’s largest media and entertainment company with revenues of Rs 26,000 crore in FY24.