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Siti Cable Q1 EBITDA up 30% QoQ even as operating rev drops

MUMBAI: Siti Cable Network has expressed concern over the tardy progress in billing and subscription revenue collection from local cable operators (LCOs), a feature that has hurt the multi-system operator’s (MSO’s) fiscal first quarter performance.

Siti Cable Network’s June quarter net loss widened and revenue fell compared to the prior quarter. Operating profit, however, jumped 29.9 per cent to Rs 36.26 crore (Rs 362.6 million) in the three-month period ended 30 June 2014, from Rs 27.94 crore (279.4 million) in the trailing quarter. In the earlier-year quarter, EBITDA stood at Rs 31.18 crore (Rs 311.8 million).

However, the company reported higher net loss at Rs 31.67 crore (Rs 316.7 million), compared to Rs 22.8 crore (228 million) in the fiscal fourth quarter. In the year-ago period, its net loss stood at Rs 27.07 crore (Rs 270.7 million).

As per the company, initial delays in the implementation of digitisation in Phase I and II metros, coupled with challenges faced by MSOs in executing contracts with the subscribers and implementation of revenue sharing with the LCOs, impacted its revenues.

Siti Cable’s operating revenue dropped 10.4 per cent to Rs 209.02 crore (Rs 2.09 billion) over the trailing quarter revenue of Rs 233.34 crore (Rs 2.33 billion). In the earlier-year period, revenue stood at Rs 141.74 crore (Rs 1.42 billion).

The company said that it had invoiced and recognised subscription revenue net of sharing with the LCOs under the new DAS regime amounting to Rs 134.97 crore (Rs 1.35 billion) during the quarter under review.

It reiterated that these figures were derived from the existing market trends and the ongoing dialogues with LCOs, which is why it hardly sees any significant impact on the subscription revenue from execution/implementation of such contract in the current fiscal.

Siti Cable claims to have generated subscription revenue of Rs 105.7 crore (Rs 1.05 billion) by servicing over 10 million viewers, which includes digital subscriber base of 4.3 million.

The company’s operating expenses stood at Rs 174.78 crore (Rs 1.75 billion), comprising pay channel and related costs at Rs 125.54 crore (Rs 1.25 billion). In the trailing quarter, Siti Cable’s operating expenses were at Rs 215.4 crore (Rs 2.15 billion), out of which it paid Rs 124.16 crore (Rs 1.25 billion) as pay channel and other related cost.

In the year-ago period, total operating cost stood at Rs 112.97 crore (Rs 1.13 billion), out of which pay channel component was Rs 61.80 crore (Rs 618 million).

The company said it continues to adopt focused approach of engaging LCOs, as necessitated under the current DAS environment.

Siti also promoted its CEO VD Wadhwa as executive director with immediate effect.

Wadhwa commented, “We continue to focus on improvement in quality of our services to our viewers and improvement in our subscription revenues. The results for the quarter are reflective of these efforts. The subscriber revenue during the quarter has shown robust growth of 229 per cent and with the starting of package billing in DAS II cities and likely roll-out of digitisation in Phases III & IV, it is set to further improve in the coming quarters.”

Commenting on the changes in the industry landscape, Wadhwa added, “These are challenging but exciting times and the entire industry is going through a major overhaul, and Siti Cable is playing a crucial role in taking the lead in introduction and implementation of the best practices for improvement of overall health of the industry and garnering the support of other MSOs as well in its efforts, which will eventually result in significant improvement in the financial performance of all the stakeholders.”

The Siti Cable counter settled the day’s session at Rs 29.45 a share, up 4.8 per cent on the BSE.

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