New Delhi/Mumbai: Bharti Airtel Ltd may sell a 25% stake in its satellite television, or direct-to-home (DTH) business, according to four people familiar with the matter.

The money-losing satellite television business is estimated to have an enterprise valuation of $1.1-1.2 billion, according to the people, who included three investment bankers. All four did not want to be identified because of the sensitivity of the matter.

A Bharti Airtel spokesperson said the firm does not comment on speculation.

While bankers have not been hired, Bharti Airtel has approached some interested parties and received some presentations, the people said.

At the end of December, Airtel digital TV had 7.9 million customers on its DTH platform, up 12% from 7 million a year earlier. The digital TV business of the company posted sales of 428 crore for the quarter ended December, accounting for just 3% of the company’s total revenue. December quarter revenue rose 29% from a year earlier. Third quarter operating margin was at 3.4%.

The company said average revenue per user in the DTH business increased 16% to 186. Airtel DTH service is available in 632 districts across the country.

“This is just a reaction on Airtel’s part to offset the impact of big investments that they’ve made in the past which have resulted in losses. They want to make up the loss by selling a stake in the DTH business," said an analyst who declined to be named. “The industry has grown in the first phase of digitization, which is a good sign for DTH and it will be in stronger position going forward."

Earlier this week, Bharti Airtel announced that it had raised $1 billion through an overseas bond sale. The sale was the largest by an Indian telecom company and the money raised will go towards repaying the firm’s high-cost debt. The 10-year unsecured bonds had a coupon of 5.125% a year. At the end of the December quarter, Bharti’s total debt was $11.7 billion.

The government has mandated cable TV to be digitized in a phased manner across India by 31 December 2014. The first phase of digitization of television signals has been implemented in Kolkata, New Delhi and Mumbai. The deadline for the second phase of digitization is 31 March.

The Indian cable TV industry’s total subscription revenue is estimated to grow to $6.4 billion by 2020 from $4.2 billion in 2011, according to Media Partners Asia Ltd, a Hong Kong-based independent provider of information services.

Vidhi Choudhary contributed to this story.

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