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DTH subscriber adds slow in FY17 due to demonetisation and absence of Cricket WC

MUMBAI: The direct-to-home (DTH) industry will add fewer subscribers this fiscal than the preceding year due to demonetisation of high-value currency notes and the absence of the Twenty20 World Cup.

The six private DTH operators are expected to end FY17 with an addition of 9.5 million gross subscribers as against 11.3 million a year ago.

After a good first half, the DTH sector thought that it would reap a good harvest in FY17. But with Prime Minister Narendra Modi announcing, on 8 November, the scrapping of Rs 1,000 and Rs 500 currency notes, subscriber additions slowed in the quarter ended 31 December 2016.

The hangover is being felt in the subsequent quarter and the impact is more noticeable as the year-ago period saw hectic activity on the subscriber front due to the Cricket World Cup.

Based on market trends, the DTH industry expects to add 2.5 million subscribers at the gross level in the quarter until 31 March 2017. This is much below the estimated 4 million subscribers the DTH operators had added in the exit quarter of FY16.

“After demonetisation, there has been a general lull in the market. There is some improvement after the December month, but it can’t match the previous fiscal’s final quarter as there was the Cricket World Cup,” a senior executive of a DTH company said.

Dish TV, India’s largest DTH company by subscribers, has felt the demonetisation shock in the fiscal third quarter. The company said that its subscribers would have been 8–10% higher in the quarter ended 31 December 2016 if the high-value currency notes were not demonetised in November.

The DTH operator added 204,000 net subscribers in the fiscal third quarter compared to 249,000 a quarter ago, thus seeing an 18% quarter-on-quarter (QoQ) drop. Incidentally, Dish TV has a large chunk of its subscribers coming from smaller cities, areas where the impact of demonetisation would have been higher.

Jawahar_Goel02“Limited cash supply made people defer their DTH recharges by a few days or weeks depending on the urgency of other basic necessities. The impact was stronger in the second tier and below towns and cities as most of the economy in these areas runs on cash. Our subscription revenue during the quarter could have been higher by around 8% in a non-adverse scenario. Lower growth eventually resulted in lower ARPU as well,” Dish TV CMD Jawahar Goel had said while commenting on the company’s third-quarter results.

Airtel Digital TV also felt the shock as it mopped up 183,000 net subscribers, its slowest addition since the last five quarters. For the first two quarters, Airtel Digital TV’s performance on the subscriber front was actually strong. In the fiscal second quarter ended 30 September 2016, it added 256,000 net subscribers, which was its highest in the last four quarters. In the first quarter of FY17, the DTH operator had 424,000 subscribers, which was again its best Q1 in the last four years.

Videocon d2h mopped up 250,000 new subscribers in the fiscal third quarter ended 31 December 2016.

dish tv, airtel digital tv and videocon d2h dth op table 1
On the net subscriber front, the three DTH operators combined have seen a 17.05% fall in the first nine months of FY17 to 2.63 million compared to 3.17 million a year ago.

dish-tv-airtel-digital-tv-and-videocon-d2h-dth-op-table-3-2

DTH operators Tata Sky and Sun Direct do not announce their subscriber base. It is pertinent to mention here that Reliance Digital TV has not seen any increase or fall in subscribers for four straight quarters ended 31 December 2016.

The impact of lower subscriber growth, coupled with demonetisation, resulted in lower average revenue per user (ARPU) as well. For Dish TV, ARPU fell to Rs 151 in the quarter ended 31 December 2016 while in case of Airtel Digital TV it was flattish. Videocon d2h saw a drop in ARPU to Rs 205 from Rs 209 in the second quarter.

dish tv, airtel digital tv and videocon d2h dth op ARPU table 2
The Phase IV of digital addressable system (DAS) has also seen a slow transition. The Ministry of Information and Broadcasting (MIB) had extended the cut-off date for Phase IV of DAS to 31 March 2017 due to pending court cases and unsatisfactory progress of installation of set-top boxes (STBs).

The MIB had also set 31 January 2017 as the new cut-off date for multi-system operators (MSOs) to switch over to digital mode of transmission on account of ongoing court proceedings.

Earlier, digitisation in Phases III and IV was targeted to be achieved by 31 December 2015 and 2016 respectively.