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Sun Direct turns profitable at net level for full fiscal for first time

MUMBAI: Sun Direct, the DTH arm of the Kalanithi Maran-promoted Sun group, has turned profitable at the net level for the full fiscal for the first time.

For the financial year ended 31 March 2017, Sun Direct posted a net profit of Rs 32.21 crore compared to a loss of Rs 35.30 crore a year ago.

Total income stood at Rs 1,211.04 crore, up 8.46% from Rs 1,116.61 crore in FY16. The FY17 figures are provisional. Sun Direct does not officially announce its financial performance as it is not a listed company.

Sun Direct was incurring losses till FY16. The DTH company, which is largely present in South India, narrowed its net loss in FY16 which stood at Rs 156.92 crore in the previous year. Total operating income grew 6.48% from Rs 1,048.62 crore in FY15. The rise in income was backed by growth in subscription income.

DTH companies like Dish TV, Tata Sky and Videocon d2h are already profitable.While Dish TV reported net profit of Rs 109.3 crore in FY17, Videocon d2h’s net profit for the same financial year stood at Rs 30.4 crore. Videocon d2h will merge with Dish TV later this year, after obtaining the necessary approvals.

Tata Sky turned around in the fiscal ended 31 March 2016, posting a net profit of Rs 80.08 crore on a revenue of Rs 4,490.96 crore. Airtel Digital TV, the DTH arm of Bharti Airtel, also turned EBIT positive in FY16. The company turned Ebit positive for the full-fiscal at Rs 184.3 crore compared to EBIT loss of Rs 158.1 crore in FY15.

With Sun Direct turning profitable, the promoters need not infuse equity funding to support the 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.

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.

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.

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 its offers to 55. This will help the company to improve its ARPU going forward, a media analyst said.

Sun Direct has a 9% share of the total active DTH subscriber base of 63.61 million, as per TRAI data for the quarter ended 31 March 2017. Dish TV leads the pack with a 25% share, followed by Tata Sky (23%), Airtel Digital TV (21%), Videocon d2h (20%) and Reliance Digital TV (2%).

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