Paytm has officially announced its decision to sell its entertainment ticketing business to Zomato for ₹2,048 crore in cash, marking a significant strategic shift for the fintech giant. Zomato has cash of 12539 Cr on books as of Q1. This move allows Paytm to sharpen its focus on its core operations in payments and financial services, which have become increasingly vital as the company navigates recent challenges.
Business Performance
The entertainment ticketing business, which encompasses movie, sports, and live event ticketing, generated ₹297 crore in revenue and ₹29 crore in adjusted EBITDA for the fiscal year 2024. Paytm’s parent company, One97 Communications Limited, highlighted that this transaction not only reflects the value created through its ticketing ventures but also reinforces its commitment to enhancing shareholder value.
Transaction Details
As part of the agreement, Paytm will transfer ownership of its entertainment ticketing business, including the platforms TicketNew and Insider, to Zomato’s subsidiaries. Approximately 280 employees from the ticketing division will also transition to Zomato. The deal is structured on a cash-free, debt-free basis, with the final transaction value subject to adjustments based on cash and net working capital at closing.
Transition Plan
During a transition period of up to 12 months, movie and event tickets will continue to be available on the Paytm app, ensuring a seamless experience for users and merchant partners. This arrangement is designed to facilitate a smooth handover while Zomato integrates the new assets into its operations.
Strategic Implications
For Paytm
Paytm’s decision to divest its entertainment ticketing business comes as it seeks to streamline operations and concentrate on expanding its offerings in insurance, equity broking, and wealth distribution. The company has faced a sales decline, attributed in part to regulatory challenges affecting its payments bank, prompting a reevaluation of its business strategy.
For Zomato
Zomato’s acquisition aligns with its goal to enhance its “going-out” business, which has seen substantial growth, with revenues from this segment reportedly doubling year-on-year. The integration of Paytm’s ticketing assets is expected to bolster Zomato’s position in the entertainment sector, providing new avenues for revenue generation.
Company Statements
In a statement, a Paytm spokesperson expressed gratitude to the team members who contributed to the growth of the entertainment ticketing business, emphasizing the importance of focusing on long-term growth in core areas. The transaction is anticipated to close within the current quarter, pending the fulfillment of agreed conditions.
