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Dish TV’s target on net subs adds, capex and content cost in FY18

MUMBAI: Dish TV is looking to net 1.3 million new subscribers this fiscal while ARPU (average revenue per user) could see a nominal increase.

The DTH operator’s capital expenditure could marginally rise in FY18 while operating profit margin is expected to inch back to 35%.

“We are looking to add 1.2-1.3 million subscribers in FY18,” a Dish TV official said. In the previous fiscal, Dish TV added 1.02 million subscribers.

Impacted by demonetisation, the DTH industry slightly de-grew in terms of new acquisitions during FY17 despite coming closer to the implementation of digitisation. The six private DTH companies added 11 million subscribers in FY17 compared to 11.6 million new customers in the preceding year.

With digital addressable system (DAS) spreading to Phase III and IV in the last couple of years, DTH has been a big beneficiary. The forecast is that the sector could mop up anywhere between 11 million and 13 million new subscribers in FY18.

“In DAS Phase III and IV, DTH is strong. The DTH sector has seen robust subscriber additions over the last few years,” a media analyst said.

Based on current market dynamics, Dish TV expects ARPU growth to be nominal in FY18. The annual ARPU in FY17 stood at Rs 154 compared to Rs 157 a year ago.

There are three major events this year which could impact ARPU. First to come is the Goods and Services Tax (GST), which is fixed at 18% for DTH and cable TV services. Then there is the new TRAI tariff order which is currently being contested in the court. The Dish TV-Videocon d2h merger is also expected to be completed by September-October.

Dish TV’s content cost is expected to increase in the range of 6-7% in FY18. This is in line with the earlier year’s increase in content cost. Content deals with Star India and Zee were extended and will come up for renewal this July-August.

Dish TV’s capex in FY18 is expected to fall between Rs 750 crore and Rs 800 crore. In FY17, the DTH company’s capex was Rs 745 crore.

Dish TV expects EBITDA margin to return to the FY16 level of 35%. EBITDA margin had fallen to 32% in FY17.

Subscriber acquisition cost (SAC) has reduced to Rs 1,680 versus Rs 1800-1900 over the last two years. However, Dish TV does not expect this to fall below Rs 1,000 because of intense competition among the DTH operators.

Dish TV’s gross debt stood at Rs 1,140 crore and net debt at Rs 685 crore as of 31 March 2017.

For Dish TV, FY18 should be a defining year as not only will it be at the forefront of subscriber additions but will also complete the amalgamation of Videocon d2h with itself.