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Hathway’s carriage revenue drops, EBITDA narrows to Rs 24.6 crore

MUMBAI: Multi-system operator (MSO) Hathway Cable & Datacom reported a drop in carriage and operating revenues on a quarter-on-quarter (QoQ) basis while EBITDA narrowed.

Carriage revenue dropped to Rs 75.8 crore in Q3

Hathway’s carriage (placement fees) revenue stood at Rs 75.8 crore (Rs 758 million) in the third quarter of the fiscal. Carriage accounted for 32 per cent of the MSO’s total revenue. In the trailing quarter, Hathway’s carriage revenue was at Rs 82.4 crore (Rs 824 million).

Operating revenue for the quarter saw a 9.25 per cent fall on a QoQ basis to Rs 239.15 crore (Rs 2.39 billion), compared to Rs 263.5 crore (Rs 2.63 billion) in the second quarter. Collection from activation charges were down to Rs 7.2 crore (Rs 72 million) in the quarter, down from Rs 22.1 crore (Rs 221 million) in the previous quarter, while subscription revenue stood at Rs 99 crore (Rs 990 million), down from Rs 111 crore (Rs 1.11 billion) QoQ.

However, the company maintained that due to content-related issues, placement has been adversely impacted during the third quarter. “These issues have since been resolved with broadcasters,” it added.

EBITDA shrinks

For the quarter under review, Hathway’s operating profit (EBITDA) narrowed to 24.58 crore (Rs 245.8 million), as against Rs 40 crore (Rs 400.25 million) in the second quarter of the fiscal.

The company said that EBITDA, net of activation fees, was at Rs 17.4 crore (Rs 174 million), compared to Rs 17.9 crore (Rs 179 million) in Q2 FY15.

Hathway also said that as per management estimates, quarterly EBITDA inclusive of its several subsidiaries/JVs/associate companies, would aggregate to about Rs 32 crore (Rs 320 million).

“Consequent to Hathway’s large standalone business, its economic interest in its Phase I and Phase II digital subscriber base is significantly ahead of the competition,” the company added.

Hathway’s net loss widens to Rs 58.05 crore (Rs 580.46 million) from Rs 39.3 crore (Rs 393 million) in the trailing quarter.

Expenses under control

One breather for Hathway was that its expenses remained in check. The MSO’s pay channel cost remained at Rs 94.04 crore (Rs 940.38 million), down from 96.80 crore (Rs 968.05 million) in the trailing quarter.

Employee cost and other expenses also came down. Total expenses stood at Rs 214.57 crore (Rs 2.15 billion), compared to Rs 223.48 crore (Rs 2.23 billion) in the second quarter.

During the quarter under review, Hathway restructured its cable TV packages to include a fourth-tier (Premium Plus) package offering premium English content. The restructured packages have been introduced in a phased manner across India after the settlement of all content contracts with broadcasters in Nov 2014. “As a consequence, exit ARPU has increased to Rs 95 in Phase I markets and Rs 68 in Phase II markets. We anticipate further growth in these key metric in this quarter,” the company said.

Introduces pre-paid model

Hathway has also introduced a prepaid model for its LCOs in certain DAS areas, the company said. “This facilitates the activation of channels on a la carte basis and upgrades of customers from the starter pack. We have seen good responses to this initiative from the ground and will continue to roll out the scheme in new markets,” it said.

HD biz

The company also launched an HD personal video recorder, becoming the first MSO to do that. These STBs come with features like a dedicated search button on the remote, Pause Live TV and Rewind Live TV features. “It also has a 500 GB disk storage capacity and can record up to 625 hours of content. It comes with 1080i resolution and is supported by 7.1 Dolby Digital Plus,” the company said.

During the quarter, Hathway also launched a single HD plan all across India priced at Rs 150 per month. The HD plan has a minimum of 24 HD channels. “It includes relevant sports content and will showcase the ICC Cricket World cup. A campaign for creating awareness among the customers has also been rolled out with the help of broadcasters,” it said.

Subscriber growth

Hathway added 70,000 subscribers in the third quarter of the fiscal ended 31 December 2014, taking its total digital cable base to 8.50 million.

“With nearly 73 per cent of our subscriber base now digitised, we remain the biggest MSO in India as far as digital subscriber base is concerned. With nearly 600k STBs in stock, we will continue to seed boxes at a rapid pace in near future as well,” the company said.

As of 31 December, Hathway’s total cable universe stood at 11.70 million subscribers, while its pay cable subscribers remained at 6.40 million. The home broadband passed 2 million subscribers and broadband subscribers stood at 0.43 million.

Broadband business

The company has added 29,000 broadband subscribers (net of churn) on Docsis 3.0 in the third quarter and overall added up to 113,000 broadband subscribers by the end of the quarter.

ARPU during the quarter has seen a sharp jump from Rs 440 in the previous quarter to Rs 490 in the current quarter, the company said.

“With the strong increase in ARPU, we continue to focus on increasing our home passes in our existing cities having robust broadband potential. Over 60 per cent of our broadband customers in Pune, Hyderabad and Bengaluru have migrated to the Docsis 3.0 technology,” the company said.

Hathway’s broadband revenue in the fiscal third quarter stood at Rs 51.3 crore, up 13 per cent from Rs 45.4 crore (Rs 454 million) in the trailing quarter. In the first quarter, broadband revenue was Rs 41.6 crore (Rs 416 million).

Hathway’s standalone net debt as on 31 December 2014 stood at Rs 806.3 crore (Rs 8.06 billion).