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LCO resistance pulls down Hathway Cable’s Q3 performance
MUMBAI: It is yet another quarter of subdued performance for multi-system operator (MSO) Hathway Cable & Datacom. The company’s operating loss widened to Rs 19.2 crore (Rs 192 million) in the fiscal third quarter, even as its revenue saw a tardy 6.5 per cent increase compared to the trailing three months.
Hathway’s standalone income from operations stood at Rs 234.78 crore ( Rs 2.35 billion), as against Rs 220.28 crore ( Rs 2.20 billion) in the preceding quarter. In the year-ago period, it had posted income of Rs 154.39 crore ( Rs 1.54 billion).
Placement revenues as a percentage of total revenues amount to 31 per cent of total revenues.
Due to resistance from the local cable operators (LCOs), market condition and litigation by LCOs in certain cities, the government’s mandate of cable television digitisation could not be implemented in totality. Hathway said the company continues to invoice LCOs and realise subscription income and activation fees on best-estimate basis.
Hathway, along with its JV partners, has deployed 7.7 million set-top boxes (STBs). During the quarter, the company laid emphasis on collecting customer relationship forms (CRFs) from Phase II cities.
Operating expenses maintained a steady growth, further denting Hathway’s operating efficiency. Compared to operating loss of Rs 19.2 crore ( Rs 192 million) in the three-month period ending 31 December 2013, the company had posted operating loss of Rs 12.90 crore ( Rs 129 million) in the trailing quarter. For the earlier-year quarter, the company had reported operating profit of Rs 6.83 crore ( Rs 68.3 million).
Meanwhile, operating expenses grew 8.9 per cent quarter on quarter to Rs 198.04 crore ( Rs 1.98 billion) from Rs 181.87 crore ( Rs 1.82 billion) in the trailing quarter. In the year-ago period, expenses amounted to Rs 118.93 crore ( Rs 1.19 billion).
Hathway witnessed a steep increase in its pay channel cost to Rs 83.7 crore ( Rs 837 million), from Rs 68.3 crore ( Rs 683 million) in the trailing quarter. Other expenses rose to Rs 99.3 crore ( Rs 993 million) from Rs 98.12 crore ( Rs 981.2 million) in the trailing quarter.
Higher contribution from other income, forex gains and softening of interest outgo lent support at the net level. Hathway posted a reduced net loss of Rs 36.85 crore ( Rs 368.5 million) during the quarter under review, in comparison with a net loss of Rs 44.45 crore ( Rs 444.49 million) in the trailing quarter. The net loss stood at Rs 7.42 crore ( Rs 74.2 million) in the year-ago quarter.
Gross additions to the broadband subscriber base was around 27,000 for the quarter. The company has invested in DOCSIS 3.0 technology, rolling out our services starting October 2013 in South Mumbai. The service has been extended to the Western suburbs of Mumbai and Pune. In the ensuing quarters, there will be a further expansion of the company’s DOCSIS 3.0 foot print.
Consequent to the introduction of high speed broadband (50 MBPS), the company has seen an uptick in its broadband ARPUs and therefore the quarter on quarter revenue increased 7 per cent. Currently, Hathway has added 10,000 subscribers on its DOCSIS 3.0 platform.
Hathway Cable & Datacom offers cable television services across 140 cities and towns, and cable broadband services across 21 cities. It has set up 20 digital head-ends in the country.