Dish TV’s subs recharge took a hit in Q3 due to delay in TRAI TO implementation

MUMBAI: Direct to home (DTH) operator Dish TV has said that its subscription recharge during the October-December quarter was hit by the Telecom Regulatory Authority of India’s (TRAI) decision to push the implementation of the new regulatory framework by a month.

The company further stated that the trend is expected to reverse in February, as the tariff order gets implemented, and should become normal by the end of Q4.

Dish TV’s operating revenue dropped to Rs. 1517.4 crore for the quarter ended 31st December compared to Rs. 1594.3 crore in the trailing quarter. The DTH operator posted consolidated subscription revenue of Rs. 1412.6 crore down from Rs. 1453.6 crore a quarter ago.

The company’s quarter on quarter (QoQ) net profit zoomed to Rs 152.7 crore as against Rs 19.7 crore in the trailing quarter ended 30th September. The company’s operating profit was down at Rs 517.6 crore compared to Rs 540.6 crore in Q2. The EBITDA margin was up at 34.1% compared to 33.9% a quarter ago.

While the framework came into effect from 29th December 2018, the TRAI gave one-month time to customers to migrate to the new regime. The new regulatory framework finally kicked in from 1st February.

“The Interconnection Regulations and Tariff Order, as notified by TRAI, will lay down new norms for the television industry ushering in an era of growth, transparency, and non-discrimination. A delay in the implementation of the Tariff Order, however, before the erstwhile deadline, triggered a hesitation amongst subscribers leading to a noticeable fall in recharges during the month of December,” Dish TV India Group CEO Anil Dua stated.

“The trend is expected to reverse in February, as the Tariff order gets implemented, and should become normal by the end of this quarter. Sustainability review of long term packs had some impact on activations in select markets. That said, barring the fluctuations in December, the business delivered in line with expectations in the festival months of October and November.”

Dish TV had partially and voluntarily roll-out the provisions of the Tariff Order by offering a-la-carte channels to its subscribers at affordable prices.

“I am glad that all opposition to the Tariff Order has now finally been put to rest. We continue to strongly believe that the Regulation should minimize discriminatory pricing by ensuring a level playing field between cable and DTH platforms and should be beneficial for the entire industry thus leading to higher earnings going forward,” said Dish TV India CMD Jawahar Goel.

The company had 142,000 net subscriber additions during the quarter. The closing net subscriber base stood at 23.6 million. In Q2, the company had added 200,000 net subscribers.

The digital addressable system (DAS) phase 4 markets, increasing TV households, urbanisation, growing multi-TV households, rural electrification and improving consumer sentiment remain the primary drivers of DTH subscriber additions, Dish TV said.

New initiatives

During the quarter, Watcho, the in-house OTT app of the Company was also launched in Beta mode. “Dish TV’s unique advantage of being able to offer content through both, the traditional and streaming mediums would ensure subscriber brand loyalty. Our OTT offering would come with a fair mix of original content, linear channels, and catch-up content. The flexibility to move between pipes would enable consumers to keep TV viewing costs under check,” said Dua.

The Dish SMRT Stick was launched during the quarter at an introductory price of Rs 599 only. The device enables low–cost and modular access to internet-based services on Dish HD boxes. With the SMRT Stick, Dish TV’s existing 3.5 million NXT HD boxes can become connected boxes overnight.

The product offers 10 curated channels including Entertainment Zone – comprising of Mini Web Series, Comedy and Travel. Smart Kids – comprising of Cartoon Short Videos, Rhymes, Art and Craft and Music Box – having Hindi, Regional and English Music Videos. In addition, other curated channels like News Stand, Food Spot and Gadget Hub are also included.

Other offerings include Catch-up TV, Movies and Short Videos. The SMRT Stick also allows access to other OTT Apps like Zee 5, Sony Liv and Hungama. The premium subscription is expected to be sold for Rs. 49 per month at the end of 6 months.

Dish TV’s Connected Box would empower the new age consumer to watch both, streaming content as well as linear television using DTH technology at cost-effective prices thus offering them excellent value for money.

Integration progress

The company said that the integration of Videocon d2h with Dish TV is nearing completion. “A little over 10 months down the line from the merger, most of the merger-related integration at Dish TV India is nearing completion,” it stated.

The information technology integration moved to the next level during the quarter with the Company launching a common CRM (customer relationship management) service for both Dish TV and D2h brands.

To integrate the User Interface (UI) of both brands, the company launched ‘Project Phoenix’ immediately after the merger and it was in December finally that the teams could make a break-through by seamlessly integrating the UI of both brands but by letting the CRMs of both brands work in their individual capacity.

The integrated yet differentiated UI is expected to help achieve greater efficiencies in the areas of field service and customer satisfaction going forward.

The integration of headend infrastructure was planned to enhance the customer TV viewing experience and serve satellite operations for both its brands. During the quarter, Dish TV India upgraded and expanded its entire DTH platform to the AVP 4000 video processing platform.

The compression technology will now enable the Company to adapt to both traditional broadcast and multiscreen service delivery from a single platform. The upgradation shall also enable the Company to provide the highest video quality with significantly enhanced bandwidth cost efficiencies.

Innovating and integrating on the marketing front, Dish TV became the first in the industry to use Augmented Reality for mobile marketing and advertising. The campaign leveraged Augmented Reality/Virtual Reality to connect the two brands with the masses enabling brand recall and innovation through mobile marketing.

During the quarter, significant cost synergies were realised in transponder costs, call-centre expenses, and programming costs. The overall cost of goods and services (COGS) was down 4.2% YoY. Finance cost was lower by 9.3% YoY as debt repayments continued as per schedule. The Company aims to be debt free in two years.

Investment in brand building and marketing for both, Dish TV and d2h brands continued with both brands launching new brand campaigns for the festival season. Marketing expenses thus remained high during the quarter.

“We are optimistic about exiting FY19 with high single-digit growth in EBITDA considering back-to-back cricketing action during the fourth quarter and further realization of synergies,” said Dua.

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