21 Sep 2017
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Dish TV’s ARPU, subscriber adds and EBITDA in Q1

MUMBAI: Dish TV’s average revenue per user (ARPU) saw a rebound in the fiscal first quarter after dipping to a new low in the preceding quarter while net subscriber additions improved.

The direct-to-home (DTH) company narrowed its consolidated net loss to Rs 13.9 crore for the quarter ended 30 June compared to Rs 28.3 crore in the previous quarter. In the same quarter of the previous fiscal year, the company had posted a net profit of Rs 36.1 crore.

EBITDA for the quarter stood at Rs 201.2 crore compared to Rs 190.5 crore in the previous quarter and Rs 261 crore in the previous fiscal year. EBITDA margin was recorded at 27.2%.

The DTH operator has recorded subscription revenue of Rs 691.7 crore compared to Rs 620.5 crore in the trailing quarter and Rs 728.2 crore in the year-ago period.

The company’s operating revenues stood at Rs 738.9 crore compared to Rs 708.6 crore in the earlier quarter.

ARPU

Recovering from demonetisation, ARPU grew 10.4% quarter-on-quarter (QoQ) and was recorded at Rs 148. In the fourth quarter of FY17, ARPU was at a new low of Rs 134.

Dish TV has guided to a flattening of ARPU in the fiscal due to pressure from competitors to introduce lower packs. ARPU growth will be a more gradual process.

In future, the DTH operator expects ARPU to get a tailwind as major multi-system operators (MSOs) have started adopting the prepaid model for revenue collection. Direct collection should help correct certain anomalies in the business model of MSOs, thus helping lift overall industry ARPUs.

Net subscribers

Dish TV has added 186,000 net subscribers during the quarter, a 12.7% jump on a QoQ.

As of 30 June 2017, Dish TV has a net subscriber base of 15.7 million.

The company expects to add one million net subscribers in the current financial year.

Churn

Churn at 1% per month was slightly higher than the 0.9% per month in the previous quarter. Ramadan during the last month of the first quarter moderated subscriber additions and recharges, which otherwise could have been even stronger.

Unlike FY2017, this year the period of Ramadan fell completely in the first quarter as against a Q1–Q2 split last year. Involvement in the GST transition process during the last few days of the quarter also diluted some managerial attention towards the business.

Ad and carriage revenues

Seasonality impacted the growth in advertisement and bandwidth revenues. However, the company remains highly optimistic about the future growth potential of these two revenue line items.

Transponder cost

After a one-off impact in the last quarter, transponder costs returned to the normal run rate and were down 22% sequentially. Long-term investments in brand building and marketing were re-started during the quarter.

The strengthening Indian rupee against the US dollar is favourable for the business and would also help keep the dollar debt repayment obligations under check, Dish TV said.

Voucher-based distribution system introduced

For better inventory management and reduced inventory holding costs, Dish TV initiated a voucher-based distribution system instead of the traditional physical box-based system to stock its trade partners.

Under the new system, paper vouchers, instead of physical hardware, would be stocked by the trade partners with the physical box being delivered at the customer’s place by the service franchisee.

Synergy gains from Dish TV-Videocon d2h merger

Dish TV expects the approximate net synergies from the Videocon d2h merger to be Rs 180 crore in FY18 and Rs 510 crore in FY19. The combination of Dish TV and Videocon d2h would create one of the world’s largest DTH platform.

On 27 July, the Mumbai Bench of National Company Law Tribunal (NCLT) approved the scheme of arrangement between Videocon d2h and Dish TV India and their respective shareholders and creditors under the provisions of Sections 230–32 and other applicable provisions of the Companies Act, 2013. The company is awaiting the certified copy of the order. The appointed date for the scheme is 1 October.

With all other approvals in place, the only remaining approval is from the MIB, the company informed.

“The proposed amalgamation will further help create scale in the highly-fragmented TV distribution landscape in India while creating significant synergies through the combination. Drawing inference from our initial estimates and integration meetings held so far, we expect approximate net synergies from the amalgamation to the tune of Rs 1,800 million in FY18 and Rs 5,100 million in FY19. Significant among these would be synergies arising from unified content contracts as each major contract becomes due for re-setting,” Dish TV MD Jawahar Goel said.

GST and rural electrification

On GST, Goel said, “Dish TV has successfully transitioned to the GST regime. The DTH industry has seen a reduction in the overall indirect tax rates under GST. Though benefits due to the unified tax may take some time to reflect in numbers, the sheer check on tax avoidance in the informal cable sector should be immediately helpful in reducing irrational competition from cable. The Harmonized System Nomenclature (HSN) codes, unit and rate which need to be separately declared in the invoice in value chain right from the broadcasters to the local cable operator, under GST, will give a logical and systematic classification to goods and services, thus reducing the possibility of misdeclaration by businesses. The total amount of GST to be collected and payable by Dish TV during the current quarter would be to the tune of Rs 1,350 million.”

The government has set a deadline of May 2018 for electrification of all villages and 15 August 2022 for electrification of all households in the country. This is good news for the pay TV industry as electricity shortage has always had a negative impact on consumption of TV entertainment. With all households in the country getting electrified, television entertainment should get a spike in growth.

Dish TV, which has more than 75% of its subscriber base outside urban areas, is expecting the rural economy to recover which in turn will also help the DTH sector.

“With digitisation spreading to rural India, our primary objective is to address the needs of pay TV viewers in small towns and villages. For the first time in the history of DTH industry in India, indirect tax rates have been separately communicated to the consumers,” Goel said.

In an attempt to make TV viewing affordable for viewers, the company has introduced the Rs 160 per month (plus taxes) pack this month. In addition, by partly adopting TRAI’s new Tariff Order, Dish TV also started offering all channels, except sports and select south channels, at a la carte prices of Rs 8.50 and Rs 17.00 (plus taxes) per channel per month for SD and HD respectively.

“It would be worthwhile to mention here that none of these new offerings would be margin dilutive for our business,” he noted.

OTT and VAS

Conscious of the increasing overlap between the telecom, media and technology (TMT) sector and extensive availability of high speed data and devices at affordable prices, Dish TV is planning to launch its hybrid set-top box (STB) and would bring back its OTT services in a new avatar.

The company has been actively working to leverage its strong customer reach and backend strength based on an understanding of content nuances to bridge the gap between its linear TV offering and OTT services.

Meanwhile, Dish TV’s new HTML-5-based middleware with a cardless box and a new chip set has already hit the market.

Dish TV further enhanced its portfolio of value-added services (VAS) during the quarter. The company entered into a partnership with Visiware International, the leader in games for interactive television, to launch Cartoon Network Games with Cartoon Network India.

The games will be refreshed on a monthly basis with one game being replaced every month.

Dish TV also announced the launch of Disney Active, a fun and engaging service that brings home the magical World of Disney through a host of read-along e-books and games. The services will cost Rs 40 (including taxes) per month.