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Dish TV posts net profit for 2nd straight year; Q4 sees best subs adds in last 5 yrs

MUMBAI: Spurred by the government’s mandate to digitise in Phase III areas, direct-to-home (DTH) operators are celebrating a strong quarter of subscriber growth.

First it was Airtel Digital TV that reported a net subscriber addition of 619,000, its highest in the last 20 quarters. Now Dish TV has reported its highest quarterly subscriber acquisition in the last five years.

Dish TV added 508,000 net subscribers in the quarter ended 31 March 2016 compared to 317,000 in the preceding quarter. With this, Dish TV’s total net subscriber base stands at 14.5 million, the largest in India.

“Our campaign ‘Set-top box Matlab Dish TV’ had the desired impact. The specially designed sports packs also ensured that sports fans did not go elsewhere during the cricket season. Strengthening our connect with the customer, we upgraded our existing service infrastructure and enhanced distribution in areas that were not up to the mark. We, thus, cover newer territories,” said Dish TV chairman and managing director Jawahar Goel.

Dish TV has guided to a net subscriber addition of 1.5 million in the current fiscal. With Phase III of digital addressable system (DAS) still to be completed and Phase IV opening up, the DTH operator’s subscriber growth in FY17 is expected to remain strong.

Q4 performance

Amid a rise in content cost, Dish TV’s consolidated EBITDA fell 1.7% to Rs 260.8 crore (Rs 2.61 billion) in the fiscal fourth quarter compared to Rs 265.4 crore (Rs 2.65 billion) in the preceding quarter. However, compared to the year-ago period, EBITDA was up 18.1% (Rs 220.9 crore).

EBITDA margin at 32.6% was 178 basis points lower from the December quarter.

Net profit in the fiscal fourth quarter stood at Rs 482.8 crore (Rs 4.83 billion), which included deferred tax expense of Rs 436 crore (Rs 4.36 billion). In the quarter ended December 2015, net profit was at Rs 68.5 crore (Rs 685 million), up 17%. In the prior-year quarter, net profit stood at Rs 34.9 crore (Rs 349 million).

Content cost was up 11.5% quarter-on-quarter (QoQ). This was driven by higher payout to sports broadcasters.

Programming content and other costs stood at Rs 231.50 crore (Rs 2.32 billion) in Q4 of FY16 compared to Rs 207.31 crore (Rs 2.07 billion) in the preceding quarter and Rs 207.62 crore (Rs 2.08 billion) a year ago.

ARPU (average revenue per user) was up 1.2% to Rs 174 from Rs 172 in the trailing quarter.

Subscription revenue stood at Rs 741 crore, up 12.6% from the earlier year.

Operating revenue at Rs 799.3 crore (Rs 7.99 billion) was up 3.6% QoQ and 9.5% from the earlier year.

Churn for the quarter remained steady at 0.7% per month.

Condensed Quarterly Statement of Operations

Full fiscal performance

Dish TV reported net profit for the second consecutive year. For the fiscal ended 31 March 2016, the company reported net profit of Rs 692.4 crore (Rs 6.92 billion), which included deferred tax expense of Rs 436 crore (Rs 4.36 billion). In the prior fiscal, net profit stood at Rs 3.1 crore (Rs 31 million).

EBITDA stood at Rs 1,024.9 crore (Rs 10.25 billion), up 39.8% from the prior year. EBITDA margin was at 33.5% compared to 27.3% a year ago.

Programming content and other costs stood at Rs 855.46 crore (Rs 8.55 billion) in FY16, up 6.8% from Rs 800.75 crore a year ago.

ARPU expanded to Rs 174 from Rs 168 in FY15.

Subscription revenue stood at Rs 2,827.5 crore (Rs 28.28 billion), up 15.4%.

Operating revenue at Rs 3,059.9 crore (Rs 30.6 billion) was up 13.8%.

Dish TV said that the fourth quarter and FY16 financial numbers are not comparable on a year-on-year basis due to the icrease in service tax to 14.5%, from 12.36%, with effect from August 2015.

“As enforcement of goods and services tax (GST) regime gets delayed, multiple taxes like service tax and entertainment tax will continue to be levied on the DTH sector. Multiplicity of taxes makes it almost impossible to charge them to the subscribers. As a result, price hikes that should have otherwise gone towards increasing the abysmally low ARPUs inthe industry are now needed to maintain status quo in an adverse tax environment,” said Goel.

Condensed Annual Statement of Operations dish tv

Other Developments

Dish TV has taken its entire range of products and services to popular online e-commerce platforms like Paytm, Snapdeal, Amazon and Flipkart.

The company also added eight new channels to its platform during the month of April 2016, taking its total offering size to more than 525 channels and services.

To further enhance the digital TV experience for subscribers and build an affordable and fast deployment model for itself, Dish TV selected Wyplay’s Frog as the middleware for its next generation set-top boxes. Wyplay is an HTML5 browser-based system and incorporates all features required for traditional linear broadcast TV consumption, on-demand content and applications distributed over the internet.

FY17 Guidance

Dish TV expects content cost to increase by 7-9% and has guided for 1.5 million net subscriber additions in FY17.

The company is looking to increase ARPU by 3-4% in FY17. Incidentally, Dish TV has increased prices across most of its packs in north and south India by around 4-8% with effect from 22 March 2016.

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