Airtel is engaging with Paytm to explore sale of the Airtel Payments Bank business in exchange for shares in the financial services firm, according to two people familiar with the matter, in a move that can be seen as the telecom giant conceding the payments market to the younger firm. If the deal materializes, the second largest Indian wireless operator also plans to make an additional investment in Paytm, one of the people said.
The two firms have not yet reached a deal yet, and both have some reservations, according to one of the people. Airtel did not respond to a request for comment Friday afternoon.
In a statement, a Paytm spokesperson said, “While we don’t typically comment on market speculation, we can confirm that we remain fully focused on our strong organic growth journey and are not involved in any such discussions.”
Airtel has been engaging with Paytm for several years for potentially offloading the telecom giant’s payments bank business, according to a source familiar with the matter. But Paytm sees a major overlap in its payments bank customers and those of Airtel’s, the source said.
But the current climate has made a deal somewhat more enticing for the two firms. Shares of Paytm, which listed in 2020, are down by over 60% since the listing. An equity swap deal would add more weight to the financial firm’s popularity among investors.
Airtel’s payments bank has nearly 130 million customers and is a profitable unit, the company disclosed earlier.
