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Videocon d2h adds 0.2 mn net subs in Q2 FY16, operating profit at Rs 191 cr

MUMBAI: Videocon d2h has added 0.2 million net subscribers in the second quarter of the fiscal, as against 0.46 million in the first quarter of the financial year 2015–16.

The direct-to-home (DTH) operator’s average revenue per subscriber (ARPU) has remained flat at Rs 205, compared to the first quarter of the fiscal. However, compared to the corresponding quarter of previous fiscal, it has expanded by 7.9 per cent.

The Nasdaq-listed company, which is targeting higher subscriber additions in the second half of the fiscal due to the 31 December 2015 deadline of the Phase III of digital addressable system (DAS), has posted an operating profit (adjusted EBITDA) of Rs 191.2 crore (Rs 1.91 billion) for the quarter ended 30 September 2015.

In the trailing quarter (Q1FY16), adjusted EBITDA stood at Rs 190.27 crore (Rs 1.90 billion), while in the year-ago period (Q2 FY15) it was at Rs 144.5 crore (Rs 1.44 billion).

The company clarified that Q2 FY16 adjusted EBITDA was calculated after accounting for impact of employee stock option plan in 2014, which amounted to Rs 2.94 crore (Rs 29.44 million).

Net loss for the quarter stood at Rs 24.6 crore (Rs 246 million), compared to Rs 24.4 crore (Rs 244 million) in the trailing quarter and Rs 61.4 crore (Rs 614 million) in the year-ago period.

Revenue during the quarter under review swelled to Rs 690.1 crore (Rs 6.90 billion), from Rs 662.8 crore (Rs 6.63 billion) in Q2 FY15 and Rs 573.4 crore (Rs 5.73 billion) in Q2 FY15.

Subscription and activation revenue stood at Rs 629 crore (Rs 6.29 billion). EBITDA margin, meanwhile, was at 27.7 per cent, compared to Rs 28.7 per cent in the trailing quarter and 25.2 per cent in the year-ago period.

Saurabh DhootExpenses during the quarter stood at Rs 650.7 crore (Rs 6.51 billion), compared to Rs 618.1 crore (Rs 6.18 billion) in the trailing quarter and Rs 557.31 crore (Rs 5.57 billion) in the earlier-year quarter.

Videocon d2h executive chairman Saurabh Dhoot said, “I am happy to share that we have achieved EBITDA growth of 30.3 per cent in the first half of the current fiscal as against our guidance of 25–30 per cent growth. We are on track to deliver even stronger growth in the second half of this year, in line with the guidance shared earlier. During the quarter, we focused on enhancing our channel offering and added 14 standard definition and four high definition channels. We have recently launched two proprietary services, namely d2h Hollywood HD and Darshan. With more than 50 million eyeballs, we also continue to gain traction on advertising revenue with marque advertisers coming on our platform.”

Anil KheraVideocon d2h CEO Anil Khera said, “We estimate around 50 million television homes come under Phase III digitisation, of which 24–25 million television homes are already on the digital platform. Thus, the target market under Phase III digitisation is the remaining 25–26 million television homes that are currently on analogue cable.”

Subscriber additions

The company has added 0.2 million net subscribers (0.57 million gross) during the quarter, taking its net subscriber base to 10.84 million as of 30 September. The gross base is at 14.27 million subscribers.

ARPU

While ARPU has seen a gradual increase over several consecutive quarters, at the end of Q2 FY16, ARPU remained flat at Rs 205. In the year-ago period, however, it was at Rs 190.

Content cost

For Videocon d2h, the content cost has seen increase during the quarter. In the second quarter of the current fiscal, content cost comprised 38.1 per cent of the total revenue. In the trailing quarter, content cost comprised 37 per cent of the revenue. In the year-ago period, it was 34.8 per cent of the total revenue.

Videocon d2h began operating under new long-term content agreements in the second half of the 2015 fiscal year, said the company.

Churn

One of the concerns for the DTH operator could be a higher churn during the quarter. Monthly churn was at 1.19 per cent in the quarter, up from 0.46 per cent in Q1 FY16. In the year-ago period, churn was at 0.85 per cent per month.

Subscriber acquisition cost

Acquisition cost per subscriber (hardware subsidy) stood at Rs 1755, down from an average of Rs 1,793 in Q1 FY16.

Debt

The company had gross debt of Rs 2,486 crore (Rs 24.86 billion) and total cash and short-term investments of Rs 875 crore (Rs 8.75 billion) as of 30 September 2015.