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DEN Networks’ performance analysis in Q2

MUMBAI: Multi-system operator (MSO) DEN Networks digitised 58 per cent of its base of 13 million subscribers even as its carriage revenue saw a drop for the second consecutive quarter.

Carriage revenue

DEN’s carriage revenue in the second quarter of the fiscal ended 30 September 2015 fell 6 per cent to Rs 115 crore (Rs 1.15 billion), compared to Rs 118 crore (Rs 1.18 billion) in the trailing quarter as well as in the prior-year period.

“We received lower placement fee from one broadcaster. This is why carriage income fell marginally in the quarter. But we expect carriage revenue to stay flattish in the fiscal,” a senior DEN executive said.

Placement revenue accounted for 40.9 per cent of DEN’s overall operating revenue in Q2 FY16.

Set-top boxes

During the quarter, DEN seeded 350,000 set-top boxes (STBs) in the Phase III and IV areas, compared to 185,000 in Q1.

DEN Q2_1

As of 30 September 2015, the MSO had digitised 58 per cent (7.6 million) of its subscriber universe. In Phase III markets, it seeded 2.58 million STBs.

The management is expecting a big push with the approach of the 31 December deadline for DAS Phase III.

DEN claims a digital subscriber base of 5 million across Phase I and II markets, out of which 2.15 million STBs were deployed in Phase I and 2.84 million in Phase II.

ARPU in DAS markets

In the digital addressable system (DAS) markets, DEN’s ARPU (average revenue per user) saw a marginal dip to Rs 77, from Rs 78 in Q1 FY16. In year-ago period, ARPU had stood at Rs 75.

According to the company, 14 DAS cities are generating billing (net of taxes of more than Rs 80 in the quarter) compared to 13 cities in the trailing quarter and 11 in the year-ago period.

However, DEN is able to collect above Rs 80 per box net billing from 58 per cent of DAS paid subscribers, compared to 60 per cent in Q1FY16 and 53 per cent in Q2 FY15.

Content cost

DEN’s content cost grew marginally to Rs 136.8 crore (Rs 1.37 billion), from Rs 136.1 crore (Rs 1.36 billion) in the preceding quarter.

The company expects content cost in FY16 to go up by 10-15 per cent from the year-ago period.

Revenue from cable biz

Revenue from cable business was marginally up to Rs 259 crore (Rs 2.59 billion) in the second quarter of the fiscal, from Rs 256 crore (Rs 2.56 billion) in the trailing quarter.

DEN Q2_2

In the year-ago period, revenue from cable operations (after adjusting for LCO share of Rs 32 crore or Rs 320 million) was at Rs 255 crore (Rs 2.55 billion).

Cable EBITDA

The post-activation operating profit (EBITDA) from the cable business stood at Rs 22 crore (Rs 220 million), up from Rs 18 crore (Rs 180 million) in the trailing quarter. In the year-ago period, it was at Rs 54 crore (Rs 540 million).

Pre-activation EBITDA, however, was a loss of Rs 5 crore (Rs 50 million) in the quarter under review, as compared to profit of Rs 3 crore (Rs 30 million) in the trailing quarter. EBITDA was at Rs 38 crore (Rs 380 million) in the year-ago period.

Net loss from cable biz

Net loss from the cable business widened to Rs 37 crore (Rs 370 million), from Rs 26 crore (Rs 260 million) in the preceding quarter. In the year-ago period, DEN had posted a net loss of Rs 6 crore (Rs 60 million) for the cable business.

DEN’s broadband biz

DEN’s broadband business, operating under brand name DEN Boomband, has the ambition to achieve 1 million home passed and 100,000 subscribers in FY16.

As of 30 September, the company had 600,000 home passed (addition of 115,000 in Q2), while total subscriber base was at 57,000 (21,000 in Q2).

DEN Q2_3

DEN’s ARPU from broadband business stands at Rs 770, including dealer commission.

DEN Q2_4

Revenue from broadband operations was at Rs 8 crore (Rs 80 million) during the quarter under review, up from Rs 5 crore (Rs 50 million) in the trailing quarter and Rs 1.4 crore (Rs 14 million) in the year-ago period.

Being in an investment phase, the broadband business suffered an operating loss of Rs 20 crore (Rs 200 million), compared to Rs 18 crore (Rs 180 million) in Q1FY16 and Rs 10 crore (Rs 100 million) in the year-ago period.

Net loss from broadband stood at Rs 24 crore (Rs 240 million), as against a net loss of Rs 20 crore (Rs 200 million) in the trailing quarter and Rs 11 crore (Rs 110 million) in the year-ago period.

DEN Snapdeal TV Shop

DEN Snapdeal TV Shop saw an increase in reach to 38 million in the quarter, compared to 33 million at the end of the trailing quarter. It has also added Videocon d2h to its distribution reach.

DEN Snapdeal TV Shop has achieved an annualised GMV of Rs 199 crore (Rs 1.99 billion), while it is witnessing 2,254 daily transactions as of 30 September.

Out of all the calls received by the company, 33 per cent are being converted. There are also 20 per cent repeat customers.

Revenue from TV commerce during the quarter was at Rs 3.3 crore (Rs 33 million), up from Rs 1.8 crore (Rs 18 million) in the trailing quarter.

Operating loss was at Rs 4.3 crore (Rs 43 million), while net loss from the business was at Rs 4.4 crore (Rs 44 million), same as the trailing quarter.

Soccer business

DEN’s soccer business reported a net loss of Rs 9.8 crore (Rs 98million) in the second quarter, compared to Rs 1.4 crore (Rs 14 million) and Rs 4.6 crore (Rs 46 million) in Q1FY16 and Q2 FY15, respectively.

The company did not post any revenue from the soccer business during the quarter. In the previous quarter, revenue had stood at Rs 0.9 crore (Rs 9 million).

Also read:

DEN Q2 consolidated net loss widens due to weak rev and rise in content cost