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Siti Cable–Dish TV JV to work on content deals from FY17

MUMBAI: Content deals with broadcasters are to be negotiated jointly by Siti Cable Network and Dish TV through a joint venture company from the next financial year.

“Hopefully, all the content deals for FY17 will be part of the JV mandate. The impact of the content deals will be felt in the next fiscal because of the joint negotiations done through the JV,” Siti Cable executive director and CEO VD Wadhwa told media analysts.

vd-wadhwa03The current content deals have been inked separately. “We have done our own deals. But there already is some kind of an informal arrangement between the Siti Cable and the Dish TV teams. The JV is in the formation stage,” said Wadhwa.

Siti Cable and Dish TV are in the process of setting up a joint venture entity, C&S Medianet Pvt Ltd, which will liaise with the broadcasters together. The legal formalities are being completed and in the final structure, DTH operator Dish TV will hold 52% and MSO Siti Cable will own 48%.

Promoted by Essel Group, the two distribution companies believe that the JV will benefit from ‘better negotiations’ on content and carriage deals.

Siti Cable expects its carriage revenue to continue to grow at 8–10% for the next couple of years. Despite falling carriage income of the major broadcasting networks, the MSO’s revenue from this stream is growing because it is entering new geographies, its subscriber base is expanding, and there are more channels to launch.

Dish-TV-joining-hands-with-Siti-Cable-cover“Over the last three years, our carriage income has been going up by around 10%. Even in the first nine months of this fiscal, it has gone up despite our content deals net of carriage (content cost minus carriage revenue) with broadcasters like Star, Zee and IndiaCast. We expect to see carriage revenue grow by 8–10% for the next couple of years,” said Wadhwa.

Content cost on a full-year basis would be up 25%. “So net off carriage probably we are going to be about 15–16% up over the last year,” said Wadhwa.

Siti Cable’s capital expenditure in the first nine months of this fiscal stood at around Rs 338 crore (Rs 3.38 billion). “The capex funding for next financial year would be required largely on the broadband leg of the business. We are targeting about 0.5 million subscribers. Thus, capex should be in the Rs 300–400 crore (Rs 3–4 billion) region,” said Wadhwa. The numbers translate into a capex of Rs 7,000–8,000 per subscriber.

Siti Cable is targeting two million broadband subscribers in three years. It exited December 2015 with an overall broadband subscriber base of 107,000.

The MSO has seeded about 3.1 million set-top boxes (STBs) in Phase III, out of which 1.1 million were deployed in the third quarter of the current fiscal. It has an inventory of 1.1 million STBs and another three million are on order, including 300,000 HD boxes.

Siti Cable’s consolidated gross debt stood at Rs 1,208 crore (Rs 12.08 billion) while net debt was at Rs 1,093 crore (Rs 10.93 billion), as per data available till 31 December 2015.

Siti Cable recently raised fresh capital of Rs 530 crore (Rs 5.3 billion) from its promoters. This is the first tranche of a total capital infusion plan of Rs 680 crore (Rs 6.8 billion). The capital raised will be primarily used to cut debt and also to fund expansion plans.

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