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Hathway bets on HD, connected STBs for next level of ARPU growth

MUMBAI: Broadband and cable TV service provider Hathway Cable and Datacom has set its sight on high definition (HD) and connected set top boxes (STBs) for the next level of ARPU (average revenue per user) growth.

For the company, the immediate task on the cable TV side is to up the ARPU in digital addressable system (DAS) Phase III and IV areas.

“For the next two quarters the focus will be on increasing ARPUs, revenue driven by Phase III and Phase IV, some increase in phase II has also happened,” Hathway Cable and Datacom MD Rajan Gupta told analysts recently.

Once the Phase III and IV monetisation start bearing fruits, the company will start pushing HD and connected STBs aggressively. The company is also working on a plan to grow its HD subscriber base.

“We are doing a lot of POC on internet TV the connected boxes, so once this whole Phase III and Phase IV is complete, that is the time we start talking about next level of ARPU growth, which is where HD and the connected boxes will come into the picture,” he added.

Gupta expects cable TV ARPU from Phase III and IV markets to reach Rs 60 to Rs 90 levels soon. For the quarter ended 30 September, Phase III and IV ARPU stood at Rs 58 and Rs 41 respectively. Phase I ARPU has remained stagnant at Rs 105 for the past few quarters while Phase II ARPU has grown to Rs 98.

“If you see even Phase II started with Rs 40-50 and it kept on increasing. So we see a similar trend in Phase III and Phase IV, I mean there was a time when it was Rs. 30 we said it will reach Rs. 60. Now it looks like we will be reaching towards Rs. 60 very soon and in due time it will reach Rs. 90 levels,” Gupta noted.

He also stated that the company has closed content deals with broadcasters which has led to a stability of content cost.

Hathway has also been able to increase data limit for its broadband customers thanks to its new data center. The company has partnered Facebook, which has put servers in the company’s office.

Further, the company has started giving 1TB cloud storage and Microsoft office package free of cost to all our yearly pay term consumers in partnership with Microsoft.
Hathway’s broadband customer base has touched 7000,000 in September. Most of the customers are being served through DOCSIS or GPON technology.

Offering the technology mix of its customers, Gupta said that the company currently has around 70,000 consumers on GPON fiber to the home. Further, it has 50,000 consumers on high-quality Metro Ethernet LAN wherein also we can offer 100 Mbps speed to all consumers and all balance consumers are on DOCSIS 3 and 3.1.

“In terms of technology mix, so we have broadly three technologies, one is DOCSIS 3, 3.1, second is high-quality MEN which means all manage features etc., and third is GPON fiber to home, we really do not have any GPON fiber to the building. We do only GPON fiber to the home,” he stated.

The monthly broadband churn rate monthly is at 1.5%. Hathway had seen a one-time churn of the student population wherein it lost around 50,000 consumers in last one year.

“These were single users consuming less than 20GB a month. So essentially they were cheap android tab which they use to access wireline because earlier price arbitrage was there. The wireless was Rs. 300 and wireline was around Rs. 40, so all these consumers have gone back to mobility,” Gupta explained.

Going forward, the company is focusing on acquiring the right base. “So one of the objectives which we have taken is we do not want the consumer who is not a 100GB per month consumer,” he added.

Based on usage, we see numbers are increasing, we started with YuppTV, next quarter will announce one or two very big names, a lot of work in progress is happening, technical integration is happening, I think these are early days for OTT industry and we will see a stage where numbers are big enough to come and share with all of you.

The company is also in talks to partner with over the top (OTT) players. It has already partnered YuppTV. The OTT services will be bundled with broadband plans.

“Based on usage, we see numbers are increasing, we started with YuppTV, next quarter will announce one or two very big names, a lot of work in progress is happening, technical integration is happening, I think these are early days for OTT industry and we will see a stage where numbers are big enough to come and share with all of you,” he added.

As part of its plan to save Rs 50 crore in non-content costs from both broadband cable TV business, the company has saved Rs 12 crore during the quarter due to automation, process re-engineering, and right-sizing various functional structures.

Gupta pointed that these are structural changes and impact for same will be seen in the company’s P&L for the quarters to come.

As an example, he stated that a lot of automation has happened on the IT side. In billing, the company earlier need 750 people nationally that number has dropped to 350 people.

Similarly, Hathway had six layers from MD to the down which has dropped to four layers. “So if we have two functions doing a particular job, now we have only one function. So that is about cost and in fact, a lot more other work is happening which we will share in next quarter,” he said.

The company has also started pilots on utilising synergies of video and broadband business. Currently, they are being tested on the ground, pilots being done in selected markets.