Paytm To Merge With Airtel Payments: Is Sunil Mittal Purchasing A Stake In Paytm, After Its Profit In Q3 of FY23?

Sunil Mittal, an Indian telecommunications tycoon, is seeking to purchase a stake in Paytm by merging his financial services into the fintech company’s payment bank. It has been revealed by the people familiar with the matter.

Mittal seeks to merge Airtel Payments Bank into the Paytm Payments bank into the stocks deal and is even looking to purchase stakes from other holders, as revealed by the people who did not want to disclose their identity.

They have further added that the agreement may be in the initial stages and Airtel and Paytm may not merge in the agreement.

Shares of Paytm, which is even known as One 97 Communications, have caught back the stakes to 40 percent from its record low in November, and the fintech is showing signs of turning out to be profitable. 

The company stated in an exchange filing last month that they have narrowed down the losses incurred in the third quarter after they decided to add more customers for boosted revenue.

The representative of Paytm has talked about the matter mentioning that they have remained completely focused on attaining an organic growth journey and are not involved in any such discussions. A spokesperson from Bharati airtel has declined to comment on the market speculation.

Once, Paytm was a valuable startup and has never traded above its IPO price of 2150 INR since the company was listed in November 2021. The company has experienced the worst first-year plunge among the past IPOs in the last few years. The company is backed by Japan’s Softbank Corporation and China’s Ant Group. Mittal’s payment back is six years old, and has acquired 129 million customers. According to the exchange filings, the business turned out to be profitable on 31 March 2022.

Paytm is expanding its product offering to increase its base of customers, seeking to gain back the trust of the investors of its earning potential.

Eight brokerages have to buy or overweight recommendations for Paytm, with a consensus 12-month target price of 944.64 INR, according to the data from valid sources.

But, why is Mittal seeking a loss-making IPO- PayTM:

Sunil Mittal has shared his intentions to merge airtel Payments Bank with Paytm Payments through a stock agreement and also by the stakes of the fintech from the other shareholders.

Airtel is the second-largest telecommunications provider and has extended its branch to other industries like broadband and DTH. The company’s owner has planned to extend its vast network after the usage of the 5G network surges.

Recently, Paytm has made a development in its application. It has introduced a new feature named UPI Lite, which allows users to carry out simple and small transactions of 200 INR with a single click in the application. The company has become the first in the segment, and customers can transact without using a PIN.

The feature aims to make digital payments easily accessible to the people of India, and Paytm has promised that UPI LITE payments will not fail even during peak transaction hours.

The largest fintech company has even introduced a new cancel protect feature on the application. The company has promised that it will refund 100 percent of the payment for the bus and flight tickets with the scheme. The flights booked through Paytm will charge 149 INR and 25 INR with bus protection.

Recently, Jack Ma of the Ant Group of China, backing Paytm, is looking to reduce some of the shares in the Indian fintech startup to keep the shareholding within the prescribed limit.

The report from valid sources has stated that the financial services of the Alibaba Group have been discussing reducing the stakes in Paytm‘s parent company named One97 Communications after the former’s share percentage has increased passively because of the share buybacks.

The largest fintech startup has reported the first-ever EBITDA profit in the last quarter of 2022. The company reported an earning of 31 crore INR revenue of operations of the 2062 crore in the third quarter of FY23.

The growth of revenue was driven by the increase in the subscription of merchant revenues, growth in the distribution of loans, and momentum in the commerce business, as revealed by the company in a stock exchange filing.

The company’s profit revenue has increased from the quarter 3rd in FY22 to 51 percent of revenue in the third quarter of FY23.

Edited by Prakriti Arora