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DEN has Rs 80-cr capex plan for next 12 months

MUMBAI: DEN Networks has a capital expenditure plan of around Rs 80 crore over the next 12 months as it seeks to expand its digital cable TV and broadband business.

While the net capex for cable TV will be around Rs 50 crore, the broadband investment will be in the region of 30 crore.

DEN is going to seed an additional 1.5–2 million set-top boxes (STBs) in the DAS Phase IV areas. The cash subsidy is currently at about Rs 200–250 per STB. DEN’s total cable TV universe stands at 13 million.

On the broadband side, the MSO plans to expand to around 20 towns. The opening of the broadband infrastructure for each town will cost about Rs 1 crore to 1.5 crore.

DEN will continue to drive penetration in Delhi, for which it will incur the CPE (customer premises equipment) capex including modems, router and home wiring.

DEN expects its net content cost to be Rs 120 crore in FY17. This is expected to increase to Rs 200 crore in FY18, which would include digitisation in DAS Phase IV areas.

Out of DEN’s 10.2 million digital subscribers, the active paying subscriber base as of 31 December 2017 is 8.2 million. The active subscriber population in Phases I and II is 3.7 million while in Phase III it is about 3.9 million. The estimated subscriber base in Phase IV is about half a million.

The company expects its cable TV ARPU from Phase IV areas to touch Rs 75 per STB 10 months after the implementation of DAS.

The government has mandated switching off analogue signals in Phase IV areas on 31 March 2017, implying that the whole country would have transitioned to digital cable TV transmission.

DEN is expecting to lift its ARPU from other areas as well. In DAS Phase III, DEN is targeting the ARPU to climb to Rs 75 (inclusive tax) within five months. The cut-off date for digitisation in Phase III was 31 January 2017.

In DAS Phase II, DEN feels there is headroom for the ARPU to increase to Rs 105–110. There will be marginal upside in Phase I collections as well. The MSO exited the fiscal third quarter with ARPU of Rs 125 in Phase I (up 11% QoQ), Rs 95 in Phase II (up 6%) and Rs 64 in Phase III (up 23%).

DEN plans to expand its broadband service to 20 new cities within nine months. The broadband ARPU stood at Rs 752, as of 31 December 2016.

In the fiscal third quarter ended 31 December 2016, DEN continued to improve its net realisation from cable TV subscription billing, operating profit from cable TV saw strong growth and broadband business achieved break-even for the full quarter.

Led by growth in subscription income, DAS Phase I saw an EBITDA of 30%. In case of Phase II, the MSO achieved EBITDA of around 20%.

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