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Videocon d2h to turn PAT positive for full fiscal; eyes 2.5 mn gross subs in FY17

MUMBAI: Videocon d2h, the DTH arm of Videocon Group, is eyeing full-fiscal profitability at the net level in 2016–17.

The Nasdaq-listed company, which reported maiden quarterly net profit in the three-month period ended 30 June 2016, has also guided for free cash flow breakeven, assuming subscriber additions are in line with the current growth.

Videocon d2h expects to achieve a gross subscriber addition of at least 2.5 million for the entire fiscal.

Saurabh Dhoot“We are on track to meet our guidance for FY17. We will turn PAT positive for the entire fiscal,” Videocon d2h executive chairman Saurabh Dhoot said.

Videocon d2h is targeting EBITDA of Rs 260 crore (Rs 2.60 billion) in the fiscal second quarter, up 36% from the year-ago period. In the first quarter ended 30 June, the company reported adjusted EBITDA of Rs 252 crore (Rs 2.52 billion), up 32.4% from the prior year. Adjusted EBITDA margin expanded 210 basis points year-on-year to 30.8% during the quarter.

The DTH company is expecting to add 225,000 net subscribers in the fiscal second quarter. It had added 0.60 million gross subscribers and 0.43 million net subscribers during the first quarter of FY17. Net subscribers totalled 12.29 million as of 30 June 2016.

“The second quarter is seasonally the weakest in our business, and the numbers are normally flattish. The second half of the year is relatively and seasonally stronger,” Dhoot said.

In the fiscal first quarter, Videocon d2h’s total revenue grew 23.5% year-on-year to Rs 819 crore (Rs 8.19 billion). Subscription and activation revenues grew 23.9% year-on-year to Rs 752 crore (Rs 7.52 billion). Carriage revenue grew over 47% to Rs 27.1 crore (Rs 271 million), while ad revenue grew 12.1% to Rs 9.1 crore (Rs 91 million).

videocon-d2h-logo-cover“Proprietary services are getting a good traction across genres such as cinema, music, kids, educational and religious content. We now have close to 1.5 million customers subscribing to one or more of these services in addition to their monthly subscription packs. Clearly, the platform we have today caters to over millions of households in India and is generating good amount of advertising revenue across these services. In fact, many brands such as BMW, Hyundai, Jet Airways and Suzuki have started advertising on our platform. These are now beginning to contribute meaningfully to revenue and EBITDA,” Dhoot told media analysts.

Capital expenditure in the fiscal first quarter was Rs 163 crore (Rs 1.63 billion), primarily related to set-top boxes (STBs). Adjusted EBITDA minus CAPEX came in at Rs 88.7 crore (Rs 887 million) for the quarter. Hardware subsidies came in at Rs 1,872 per subscriber.

Videocon d2h launched commercial services in early 2010 and within two years achieved a subscriber base of 5 million. The 10-million subscriber mark was achieved within four years of launch. The company turned EBITDA positive within three years. “Our journey to profitability has been one among the fastest in our industry,” said Dhoot.

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