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Dish TV’s Q3 performance hit by demonetisation

MUMBAI: With a large chunk of its subscribers coming from smaller cities, the demonetisation of high-value currency notes by the government impacted DTH operator Dish TV’s fiscal third quarter performance as net subscriber additions and ARPU fell quarter-on-quarter (QoQ).

Dish TV said its subscriber additions would have been 8–10% higher in the quarter ended 31 December 2016 if the Rs 1,000 and Rs 500 currency notes were not demonetised on 8 November. The DTH operator added 204,000 net subscribers in the fiscal third quarter compared to 249,000 a quarter ago, thus seeing a 18% QoQ drop. Dish TV’s total net subscriber base stood at 15.3 million, as of 31 December.

EBITDA and net profit

EBITDA for the quarter ended 31 December fell 6% to Rs 249.5 crore from Rs 265.4 crore a year ago. It fell 5.6% QoQ (Rs 264.2 crore in Q2 of FY17). EBITDA margin stood at 33.4%.

Net profit was Rs 26.7 crore.

Dish TV Q3 fy17 Condensed Quarterly Statement of Operations


Consolidated subscription revenue stood at Rs 692.1 crore, up 3.3% year-on-year (YoY). It fell 5% QoQ (Rs 728.8 crore in Q2 of FY17) due to a fall in ARPU led by demonetisation.

Operating revenue at Rs 748 crore was up 2.4% YoY. In the preceding quarter, it was Rs 779.3 crore.

Jawahar_Goel02Dish TV CMD Jawahar Goel said subscription revenue would have been 8% higher sans demonetisation. “Limited cash supply made people defer their DTH recharges by a few days or weeks depending on the urgency of other basic necessities. The impact was stronger in the second tier and below towns and cities as most of the economy in these areas runs on cash. Our subscription revenue during the quarter could have been higher by around 8% in a non-adverse scenario. Lower growth eventually resulted in lower ARPU as well,” he said.

Effective 1 April 2016, Dish TV harmonised the accounting of entertainment tax in line with industry practice. Earlier, entertainment tax was recorded as an operating expenditure. However, it is now netted off against subscription revenues. “Q3 FY16 figures have been regrouped accordingly for the sake of comparison. Year-on-Year revenue growth would have been higher considering service tax rate of 15% in Q3 FY17 as against 14% in the corresponding quarter last fiscal,” the company said.

Dish TV Q3 fy17 Expenditure


Dish TV’s ARPU at Rs 151.4 was down 6.5% over the preceding quarter.

Cashless and prepaid models of revenue collection

Dish TV has been one of the early adopters of the cashless and prepaid methods of revenue collection. The DTH company had close to 30% of its subscribers paying it through various means of online recharges with the balance using the Electronic Payment Recharge System (EPRS). But that was until 8 November 2016. With 86% of India’s currency pulled out of circulation from the very next day, recharges where the medium of transaction was through EPRS became weaker than initially expected.

Dish TV took several steps to keep consumers and dealers hooked on. “Subscribers as well as trade partners were extended temporary credit facilities based on their past transactions pattern. Subscriber awareness drives to promote alternative methods of payment were run both on the ground and on screen in addition to various other initiatives,” said Mr. Goel.

Goel feels that demonetisation will have a positive impact on the DTH industry in the long run as it promises an eventual less-cash dependent population that should use online payment interfaces over cash for recharges.

“Though demonetisation has led to an initial distress, it also will result in certain structural changes that are going to benefit the economy in the long run. As far as our business is concerned, the effect has already started coming in. As online payment transactions, credit cards and a less-cash society become buzz words today, we are happy to note an increase in our online transacting subscriber base from 30% to around 38% with around 22 digital wallets and the like being integrated with the company. Every online recharge transaction vis-à-vis EPRS-based transaction implies savings on recharge commissions paid by us,” Goel said.

Commenting on the Q3 results, Goel said, “We believe that the negative impact of demonetisation is only temporary and that with a strong subscriber growth rate, tight control on costs, reasonably steady free cash flows and a healthy balance sheet, we should deliver sustainable growth. The rollout of the Goods and Services Tax (GST), a hopefully favourable licence fee regime and a revenue-conscious cable industry should only add to the strengths of Dish TV going forward.”

The DTH company said work continued on the proposed Dish TV–Videocon d2h merger. Applications were filed during the quarter with the Competition Commission of India (CCI) and the stock exchanges for obtaining their approvals.

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