Indian Fintech Paytm in Talks to Sell Movie Ticketing Business to Zomato

Paytm, a leading Indian fintech company, is in advanced discussions to sell its movie and event ticketing business to Zomato Ltd. This move is part of Paytm's strategy to divest non-core assets and strengthen its primary payments services, which have been impacted by regulatory actions.

Details of the Potential Sale

Paytm, officially known as One97 Communications Ltd., confirmed in a stock exchange filing that it is considering the sale but has not yet entered into any binding agreements. Zomato, in a separate statement, acknowledged the ongoing discussions to acquire Paytm's ticketing business to enhance its "going-out" segment.

Market Impact and Strategic Focus

The talks between Paytm and Zomato are in advanced stages, although other potential buyers are also interested. The discussions were first reported by Bloomberg News. Trading of shares for both companies was paused on Monday due to a national holiday in India.

If the sale proceeds, it would allow Paytm to concentrate on its core payments services. The fintech firm is launching promotional campaigns to attract new users and reactivate customers affected by the closure of its banking operations. Zomato could benefit from the deal by integrating the ticketing assets, valued at approximately 20 billion rupees, into its business. Although this segment represents less than 2% of Zomato’s projected fiscal 2024 sales, it could contribute to long-term profitability.

Background and Financial Details

Paytm, led by billionaire founder and CEO Vijay Shekhar Sharma, recently reported its first-ever decline in sales and announced plans to divest non-core assets. The company is also facing potential job cuts due to regulatory restrictions on Paytm Payments Bank Ltd., which previously facilitated much of its digital wallets and payments traffic.

Paytm does not provide separate financials for its movie and event ticketing division but reported 17.4 billion rupees ($208 million) in annual sales for its marketing services segment in the fiscal year ending March 2024. This segment includes movie and event ticketing, credit card marketing, and gift vouchers.

Strategic Implications for Paytm and Zomato

The successful sale of its ticketing business would enable Paytm to refocus on areas such as travel, deals, and cash-backs, which are crucial for expanding its merchant base and increasing sales. Paytm emphasized its commitment to payment and financial services, as well as digital goods commerce, in its earnings call.

For Zomato, acquiring Paytm's ticketing business could facilitate expansion into a new high-growth digital area. Zomato has been diversifying its offerings, including acquiring Uber Technologies Inc.’s Indian food delivery unit in 2020.

As Paytm navigates regulatory challenges and seeks to streamline its operations, the potential sale of its movie ticketing business to Zomato represents a strategic move to refocus on its core services. The ongoing discussions highlight the dynamic nature of the Indian fintech and digital services markets.

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