India’s Paytm is reportedly in discussions to sell its movie/event ticketing business to Zomato.
Talks between the FinTech and the food delivery firm are in the advanced stages, Bloomberg News reported Sunday (June 16), citing sources familiar with the matter.
Zomato later confirmed the report in a regulatory filing Sunday.
“We acknowledge that we are in discussions with Paytm for the aforementioned transaction, however, no
binding decision has been taken at this stage that would warrant a Board approval and subsequent disclosure
in accordance with applicable law,” it said.
The proposed deal is happening as Paytm is looking to reverse its fortunes amid declining revenues. The company last month reported its first-ever drop in sales, and promised to cut its non-core assets, and also suggested layoffs could be in the cards.
As Bloomberg notes, the sale — assuming it happens — will let Paytm focus on businesses that will help it broaden its merchant base — travel, deals, and cash backs — while also letting Zomato expand into a new high-growth space.
Earlier this month, the National Payments Corporation of India reported that Paytm’s share of the country’s Unified Payments Interface (UPI) has continued to decline, with Paytm making up 8.1% of total UPI transactions last month, compared to 13% in January.
Paytm accounted for 1.1 billion customer-initiated transactions on the network, placing it in third behind the Walmart-backed PhonePe (6.8 billion) and Google Pay (5.2 billion), whose share of the market continues to rise.
Companies like Paytm, Google and PhonePe are all competing for consumer attention in a country that has been on a “digital payments journey” for the last 15 years, as PYMNTS wrote late last year.
Research by PYMNTS Intelligence has shown that digital wallets are now the preferred payment method for more than half of retail purchases in India, with 80% of digital wallet users choosing to transact over UPI.
Paytm has been struggling since January, when India’s banking regulator suspended business at Paytm Payments Bank — which had processed much of Paytm’s payments — after an audit uncovered “persistent noncompliances and continued material supervisory concerns.”
The move by the Reserve Bank of India (RBI) followed two years of warnings about the questionable relationship between Paytm and its banking arm.
Later reports said the RBI arrived at this decision after the audit discovered money and data traffic flow between Paytm Payments Bank and its parent company that led to accounting and supervisory problems.
The regulator also warned of potential conflicts of interest, with the same executives making decisions at both Paytm and Paytm Payments Bank.
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