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Forex fluctuations impact Dish TV’s Q3 performance; subscriber additions stay muted

Foreign exchange fluctuations impacted Dish TV’s third quarter financial performance even as subscriber addition stayed muted while average revenue per user (ARPU) showed marginal improvement.

Net loss in the quarter ended 31 December stood at Rs 38.2 crore ( Rs 382 million), wider from the previous quarter loss of Rs 16 crore ( Rs 160 million). Dish TV’s net loss in the year-ago period was higher at Rs 44.88 crore ( Rs 448.8 million)..

dish_q3_m

Operating profit margin (EBITDA) contracted 260 basis points year-on-year to 22 per cent on account of higher programming costs and rise in other operating expenditure. EBITDA stood at Rs 135.5 crore ( Rs 1.35 bn), down 1.6 per cent yoy  and down 8.4 per cent quarter-on-quarter.

The direct-to-home (DTH) company witnessed a 9.9 per cent yoy rise in operating revenue to Rs 612.8 crore ( Rs 6.13 billion), but higher programming costs besides rupee strengthening against US dollar impacted its operations. On qoq basis, operating revenue grew 3.4 per cent, largely helped by addition in subscriber base.

For the quarter under review, programming costs stood at Rs 198.9 crore ( Rs 1.99 billion), up 26.5 per cent yoy  and 6.7 per cent qoq.  Expecting moderation in content cost, the management has guided for a 12-15% growth in programming and other costs..

dish_q3_eSaid Dish TV managing director Jawahar Goel, “A relatively strong currency resulted in a translational loss, due to foreign exchange fluctuation, of Rs 70 million on foreign deposits (same have been booked above EBITDA).  This along with exchange rate adjustment demand worth Rs 54 million, for transponder payments, negatively impacted the EBITDA for the quarter”.

If adjusted for these two items, EBITDA stood at Rs 1.48 billion.

Further enlightening on the new ORA (on request a la carte) scheme and the future of DTH segment, Goel said: “The company was the first to roll out the ‘ORA’ scheme on it platform. While a reasonable content cost payout is well adopted, an unjustified increase in payment for content can jeopardize the existence of DTH in the country.”

Beginning 1 January, Dish TV has put 22 IndiaCast UTV distributed channels under the ‘ORA’ scheme. The impact of this on the content cost will be captured in the exit quarter of the fiscal.

Goel expects broadcasters to collect their share from cable operators and rationalise carriage fee payout so that the DTH operators will be less strained.

Dish TV added 220,000 subscribers in the fiscal third-quarter, taking its net subscriber base to 11.2 million. According to the company, this was the weakest diwali in the last three years and sale of TV sets was sluggish. Dish TV, however, expects the IPL and the soccer World Cup in June to boost subscriber additions.

ARPU for the quarter ended 31 December increased to Rs 166, compared to 165 in the trailing quarter.

The company’s high definition (HD) ARPU is Rs 441 and out of new subscriber additions, 10-11 per cent are HD subscribers.

Subscription revenue for the third quarter increased 11.9 per cent yoy basis to Rs 552.9 crore ( Rs 5.52 bn). Bandwidth revenue stood strong at Rs 18 crore ( Rs 180 mn), up 83.6 per cent compared to the corresponding quarter of the previous fiscal.

Subscriber acquisition cost declined 11.9 per cent yoy and 2.2 per cent qoq to Rs 1,889 as the company increased entry level prices over the year.

Meanwhile, the monthly subscriber churn rate was steady at 0.6 per cent.

Dish TV generated free cash flow of Rs 58.3 crore ( Rs 583 mn), and the same has been used to reduce debt by Rs 328 crore ( Rs 3.28 bn) in the reporting quarter. For 9MFY14, the company has pared debt by Rs 563 crore ( Rs 5.63 bn).

Dish TV expects its Sri Lankan subsidiary project to be on track and test signals are planned by February end. The company is planning to add transponder capacity for distributing localised content to strengthen its carriage revenues.

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Dish TV Q3 revenue at Rs. 6.13 bn, net subs at 11.2 mn