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Sun Direct has 3-year capex plan of Rs 1,475 cr; capital infusion from promoters not needed

MUMBAI: With Sun Direct turning profitable, the promoters need not infuse equity funding to support the direct-to-home (DTH) company.

Sun Direct, which is 80% owned by Kalanithi Maran and his wife and 20% by Malaysia’s Astro, has a capital expenditure plan of Rs 1,475 crore for the next three financial years. Out of this, the intent is to have a debt funding of Rs 450 crore during FY18–FY20.

The future capital expenditure of the company is expected to be supported through internal accruals and debt, with no further dependence on promoters’ contribution. The main capex will be for purchase of customer premises equipment (CPE), a market source said.

Earlier, the promoters of Sun Direct had been providing financial support to the company by infusing equity. Though Sun Direct started generating cash profits from FY13, it continued to incur losses until FY16.

For the first nine months of FY17, Sun Direct posted net profit of Rs 21.2 crore on a revenue of Rs 907.93 crore.

In FY16, Sun Direct reported net loss of Rs 35.30 crore compared to Rs 156.92 crore a year ago. Total operating income grew to Rs 1,116.61 crore, up from Rs 1,048.62 crore in the earlier year.

Sun Direct’s net subscriber base has remained nearly stagnant for over four years with the focus being on South India. The company has a 10% market share of the total active DTH subscriber base, which is pegged at 62.65 million, as of 31 December 2016.

Sun Direct has been able to maintain its market share in South India at about 40%. In the company’s net subscriber base, the share of South India has increased from about 94% during FY14 to over 97%.

Sun Direct’s ARPU has been seeing steady growth over the years. For the first nine months of FY17, the DTH company’s ARPU increased to Rs 175 compared to Rs 163 in FY16. ARPU in FY15 was Rs 153, up from Rs 143 in FY14 and Rs 131 in FY13.

The growth in ARPU has helped Sun Direct to improve on profitability parameters. The company’s losses at the net level have been declining over the last three years.

In FY17, Sun Direct added three transponders on GSAT 15. It has a total of eight transponders, equally split between Measat 3 and GSAT 15. The addition of the transponders has enabled the company to increase the number of HD channels in its bouquet to 55.

The increase in bandwidth will help Sun Direct to not only retain but also add subscribers while enhancing its ARPU, a media analyst said.