It has been reported that a significant consolidation in the Indian fintech industry may be on the horizon, as Airtel Payments Bank and Paytm Payments Bank could potentially merge.
According to individuals who are knowledgeable about the matter, Bharti Enterprises, led by Sunil Mittal, is exploring the possibility of integrating its payments bank division with the fintech company through a stock transaction. Moreover, the telecommunications tycoon intends to purchase Paytm shares from other investors.
According to sources, discussions between Airtel and Paytm regarding a potential merger are still in the early stages, and there is no guarantee that the deal will be finalized.
A Paytm executive stated, “We remain entirely focused on our strong organic growth journey and are not involved in any such discussions.” Bharti Enterprises declined to comment, citing market speculation.
According to insiders who spoke with Techcrunch, this isn’t the first time that Bharti Airtel has discussed selling its fintech division with Paytm.
The rationale behind this move is unclear at this time. However, it’s possible that the deal is being considered due to the overlap between Airtel Payments Bank and Paytm Payments Bank’s customer bases. Furthermore, Airtel’s payments bank is a profitable entity that could provide additional support to Paytm’s financials, which have been struggling with significant losses.
The merger could also enable Paytm to leverage Airtel’s payments bank license, as the Reserve Bank of India has prohibited the fintech giant from onboarding new customers due to issues with its technology systems.
According to insiders, discussions between Airtel and Paytm regarding a potential merger are still in the early stages, and it is uncertain whether the deal will come to fruition.
A Paytm executive has been quoted as saying, “We remain fully focused on our strong organic growth journey and are not involved in any such discussions.” Bharti Enterprises declined to comment, citing market speculation.
Techcrunch sources have revealed that Bharti Airtel has previously considered selling its fintech division to Paytm.
The exact reason behind this move is unclear. However, it could be driven by the overlap between the customer bases of Airtel Payments Bank and Paytm Payments Bank. Additionally, Airtel’s payments bank is a profitable enterprise that could boost Paytm’s financials, which have been weakened by sustained losses. The deal could also allow Paytm to leverage Airtel’s payments bank license, as the fintech company is currently prohibited by the Reserve Bank of India (RBI) from enrolling new customers due to technology system gaps.
This development comes a few months after reports indicated that Airtel Payments Bank was planning to list on the stock exchange in the near future.
The rationale behind Airtel’s decision is currently unknown, given that the telecom giant’s fintech subsidiary is a profitable entity.
Since its launch in January 2017 with an initial investment of $440 million, Airtel Payments Bank has served over 130 million customers and generated annualized revenue of INR 1,000 crore as of December 2022.
Airtel was one of the 11 initial companies granted licenses to operate as payment banks.
