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DEN Networks’ net down QoQ; carriage sees mild drop

MUMBAI: DEN Networks notched a third-quarter operating profit of Rs 91.95 crore ( Rs 919.5 million) from the cable TV business, up three per cent from the Rs 89.43 crore ( Rs 894.3 million) it reported in the trailing quarter, amid a mild fall in carriage and activation revenues. A year earlier EBITDA was Rs 63.63 crore ( Rs 636.3 million).

Revenue from cable TV business in the three-month period ended 31 December 2013 came to Rs 281 crore ( Rs 2.81 billion), up seven per cent from the Rs 262.31 crore ( Rs 2.63 billion) it captured a quarter earlier. In the year-ago period, revenue stood at Rs 229.66 crore ( Rs 2.3 billion).

Subscription revenue grew 5.9 per cent to Rs 105 crore ( Rs 1.05 billion), from Rs 99.11 crore ( Rs 991.1 million) a quarter earlier. This was offset by a drop in carriage and activation income.

Carriage income dropped to Rs 117.8 crore ( Rs 1.17 billion), from Rs 119.90 crore ( Rs 1.2 billion) in the preceding quarter.

Given the increased competition in the current business environment, the multi-system operator seeded increased boxes at reduced activation charges. Activation charge, a one-time revenue, reduced to Rs 28.6 crore ( Rs 286 million) in this quarter compared to Rs 29.43 crore ( Rs 294.3 million) generated in the trailing quarter.

Incidentally, DEN added 450,000 digital subscribers in the quarter and has around 700,000 set-top boxes (STBs) in stock. In the trailing quarter, STBs deployed were fewer (400,000).

Net profit from cable TV business (after forex losses and exceptional one time expense) dropped to Rs 5.90 crore ( Rs 59 million). The company said that exceptional one time expenses include provision for impairment/loss on sale of investment of Rs 9.3 crore ( Rs 93 million) which is primarily on account of finalisation of arbitration settlement for an analogue JVC which was going on for the last two years. In the trailing quarter, net profit was Rs 9.64 crore ( Rs 96.4 million), which included Rs 5.96 crore ( Rs 59.6 million) in forex gains.

DEN Networks CEO SN Sharma said, “The company is focusing on streamlining the consumer experience in digitised markets, starting with the initiation of consumer billing in Delhi from December 2013. Once completed across all markets, consumer billing will bring in the true benefits of Digitisation – transparency and legitimate distribution of subscription revenues across all stakeholders of the cable value chain.”

Meanwhile, for the nine-month (April–December 2013) period, cable TV revenue expanded 31 per cent to Rs 807.16 crore ( Rs 8.07 billion), from Rs 617.18 crore ( Rs 6.17 billion) a year ago.

EBITDA from cable business jumped 90 per cent to Rs 267.21 crore ( Rs 2.67 billion) compared to Rs 148.64 crore ( Rs 1.49 billion) in the earlier year.

DEN Networks claims to have an estimated reach of 13 million households in over 200 cities across India. It has over 5.7 million digital cable subscribers present in 13 states including Delhi, Uttar Pradesh, Karnataka, Maharashtra, Gujarat, Rajasthan, Haryana, Kerala, West Bengal, Jharkhand and Bihar.

The company has installed over 700,000 set-top boxes in the Phase III and IV markets and is expecting that the pace of STB deployment will pick up during July–August this year due to the approach of the deadlines.

DEN is sitting on cash as it has offloaded 17.8 per cent to Goldman Sachs for $110 million. As of December 2013, total cash and cash equivalents stood at Rs 1,203 crore ( Rs 12.03 billion).

DEN’s plan of launching high-speed cable broadband services for its subscribers across geographies is in the final stage. As first reported by TelevisionPost.com, the MSO would be investing Rs 200 crore ( Rs 2 billion) in broadband.

The company’s senior management team for the broadband vertical is led by former Tikona Digital Networks COO Yugal Kishore Sharma. A new office space spreading over 14,000 sq feet has been acquired for the broadband team.

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