Dish TV confident of becoming debt-free in next two years due to steady cash flow

MUMBAI: Direct to home (DTH) operator Dish TV is confident of becoming debt free in the next two years based on the quarterly cash flows being generated by the company.

Dish TV chief financial officer (CFO) Rajeev Dalmia said that the company could become debt-free if it generates Rs 250-300 crore every quarter. In Q3 FY19, the company’s free cash flow was Rs. 225 crores, which was utilised for the dividend payment and repayment of bank loans. For 9M FY19, the cash flow was around Rs. 700-750 crore.

“If we continue to generate around Rs. 250 crores to Rs. 300 crores per quarter, then we are pretty confident that in the next two years we will be more or less debt-free,” Dalmia told analysts during the Q3 earnings conference call.

As on 31st December, Dish TV’s gross debt was Rs. 2,450 crore while net debt was Rs. 2,050 crore.

Dalmia also noted that the company’s Capex for FY19 will be lower than anticipated. During Q3, the company’s Capex was Rs 260 crore while for the 9M period it was Rs 680 crore. The company’s Capex plan for FY19 was Rs 900 crore.

Explaining the drop in Capex, Dalmia said, “It can be even less because of the reduction of set-top box prices recently. So, we have Rs. 680 crore in the nine months. It could be ending with Rs. 850 crore to Rs. 875 crore.”

Dish TV CMD Jawahar Goel said that the FY20 Capex will be even lower because the company has concluded set-top box (STB) deal at a very competitive price. “So, I don’t want to make a comment, but it can be even within Rs. 700 crore,” he added.

Talking about the Rs 3000 crore investment in subsidiary company Dish Infra, Dalmia said that the company had financed around Rs. 2,550 crore to Dish Infra for mitigating the day-to-day expenses. Now by issuing equity it will try to equalise the same so that there is no debtor, creditor relationship between the holding and the subsidiary company.

Goel said that the company is not satisfied with the 20% commission in the new TRAI tariff regime and it will negotiate a better deal with the broadcasters.

“Going forward, I think it is difficult to calculate, because we are in the different model. We get paid for the pipe and margin from the broadcaster. We are not happy with this 20% margin that is being given by the broadcaster. So, we are negotiating with them, talking to them. These things will start happening after the broadcaster gets first or second weekly report of their channel viewership. Thereafter the new discussion will start happening,” he stated.

He also stated that the Mera Apna Pack which allows customers to choose channels on a la carte basis has 8 million subscribers. He also feels that the broadcasters will have to reset the channel price depending on the channels being selected by the consumers.

“The big four broadcasters, are a responsible lot, they have a big base, a big stake. I am not talking about them. But small broadcasters who are running a channel by buying content are asking Rs. 3 per channel for each channel. The channel may not be worth even 10 paisa per month. So, these broadcasters will be forced out of the market,” he noted.

Goel also foresees that a lot of Hindi movie channels will go bust under the new regime. “You must have seen there are around 15-20 Hindi movie channels. They are surviving on connectivity as well as the capacity to buy content compared to lower established players. I think they will go out from the market. So, I think movie buying rights will get reset.”

He also stated that the company’s marketing budget has remained constant at Rs 100 crore for the last few years. Additionally, Dish TV is also getting a lot of free airtime from the broadcasters which will help in keeping the marketing cost low.

The company will continue with both Dish TV and d2h brand. “We will continue both the brands. As we have said that d2h brand eventually become a south language brand.. And both the brands will be sold in the market throughout the country. But the platform-wise, we are focusing south as d2h to service satellite in south market.”