Dish TV & Videocon d2h mergers as a single DTH Co .
Direct-to-home television operator Dish TV to merge with Videocon d2h , ( Vd2h ) creating India ' s largest media company by sales . Dish TV is the market leader in the DTH space while Videocon is the third largest by subscribers . Vd2h is an Indian entity with its ADS listed on NASDAQ , while Dish TV is listed on NSE & BSE . The combined entity will be renamed Dish TV Videocon Limited ( MergeCo )
Key terms :
Exchange ra�o :
· Dish TV Videocon Ltd will issue 857.79MM fresh shares
· 1 share of Vd2h = 2.021 shares in Dish TV Videocon
· Post-deal , Dish TV shareholders = 55.4 % Vd2h shareholders = 44.6 %
Financial Advisors :
· Dish TV — Morgan Stanley
· Videocon d2h — Yes Securi�es
ADS ( American Depositary share ) is a U . S . dollar-denominated equity share of a foreignbased company available for purchase on an American stock exchange .
GDR ( Global Depositary Receipts ) is compulsory for foreign company to access in any other country ' s share market for dealing in stock . But American depository receipt ( ADR ) is compulsory for non-US companies to trade in stock market of USA .
Lis�ng on exchange
· MergeCo shall con- �nue to be listed on the NSE and BSE in India
· MergeCo shall ins�tute a new GDR lis�ng on the Luxembourg exchange
· In the Scheme , holders of Vd2h ADRs will receive their new shares in the form of GDRs .
Deal Ra�onale :
· The benefits of scale are expected to be immediate and significant , right from combined purchasing , product development and distribu�on to customer service and support .
· Be�er growth opportuni�es for employees along with the added reduced infrastructure and network capex makes this an excellent move .
· Videocon with its exper�se in distribu�on and service along with manufacturing advantages complements the content sourcing and media experience provided by Dish as its forte .
· The combined en�ty would not only benefit from these synergies but also be able to create alterna�ve revenue streams in the form of carriage , adver�sing , certain value-added services and new channel launches .
Our 2 cents : The satellite TV market in India with at least 7 players as opposed to 2-4 in most other countries , has been due for consolidation . The surprise though was when two of the biggest players in the industry were the first in a move of consolidation . The fragmented industry means huge benefits for larger players and this combined entity ( 45 % share ) stands a long way ahead of its closest competitor Tata Sky ( 24 % share ). Most companies in this space have only recently started reporting profits after booking losses for the previous 10 years indicating benefits for large incumbents . The acceleration of digitization with set-top boxes made mandatory as per the Digitalisation of Analogue Cable System Ordinance should result in exponential growth in the market creating room for growth for the DTH players . HD TV is also gaining popularity – a high margin business for the companies .