Hathway promoters plan to infuse Rs 150 cr more in next 18 months

MUMBAI: The promoters of broadband and cable TV service provider Hathway Cable and Datacom plan to infuse another Rs 150 crore in the next 18 months. The funding would be a mix of equity infusion and quasi-equity in the form of long-term unsecured loans or ICDs.

Recently, the promoters had put in Rs 99.6 crore into the company via allotment of 3.08 crore preference shares at Rs 32.35 a share. Prior to that, the promoters had infused Rs 100 crore through unsecured inter-corporate deposit (ICD).

“Going forward also preferably in the next 18 months the promoters have shown inclination to infuse funds in the company which would be around Rs. 150 crores which maybe mix of equity infusion and quasi-equity in the form of long-term unsecured loans or ICDs,” Hathway Cable and Datacom company secretary Ajay Singh said during Q1 earnings call with analysts.

“With regards to the current funding in the company by the promoters, as you all are aware that the company has already put in for shareholder approval for equity infusion of Rs. 100 crore from promoter group company for preferential allotment which would be significantly at a price which would be significantly higher than the current market price and in line with the SEBI regulation. Apart from this, the company has also received an unsecured ICD of Rs. 100 crores in the month of July from one of the promoter groups,” he added.

Hathway Cable and Datacom MD Rajan Gupta said that the company plans to reduce debt by Rs. 500 crore by March 2020 through a mix of fund infusion by promoters and internal cash accruals.

“Out of that, Rs. 200 crore is happening by August end. Rs. 100 crore has already happened in one form, and Rs. 100 crores will happen in August through another form. So Rs. 500 crore is the overall plan with a mix of fund infusion of promoters, and whatever internal cash accrues,” Gupta noted.

During the call, Gupta also said that the company aims to reduce operating expenditure by Rs 40 crore in FY19. The company had achieved OpEx savings of Rs 50 crore in the previous fiscal.

“With the objective of offering the highest quality of service to our broadband and Pay TV consumers at the lowest possible price, just like last year, we have this year started several projects on identifying and removing out ways from our business. On top of Rs. 50 crore opex savings achieved in FY18, we are now aiming for Rs. 40 crore opex reduction in FY19,” Gupta said.

Gupta further added that the 50% of the plan to save Rs 40 crore is already implemented. In Q1 FY19, the parent company itself has reduced around Rs 7 crore opex and subsidiary Hathway Digital in spite of content cost increase has an increase overall cost, he said.

Hathway, he said, has also rolled out a new strategic growth framework which will focus exclusively on creating exceptional customer service experience for heavy data users who consumer 80 GB data per month.

“This framework will lead to J curve growth strategy in which we initially invest in growing these high usage customers through a mix of FTTH, Pay TV, OTT, IOT services and finally turnaround to harvest revenue and EBITDA growth,” Gupta stated.

Gupta noted that the company 34,000 HD consumers in first four months of FY19. The company is getting Rs. 80 per consumer per month incremental revenue from these HD consumers.

“We have recently strengthened our HD pack with Hathway now having the highest number of HD channels across any other DTH and cable platforms. We now give 96 HD channels and this should further add momentum to our HD growth strategy,” he said.

Hathway will deploy Rs 160-170 crore Capex in the broadband business in FY19. The company has no plan to increase broadband Capex. “Our broadband Capex guidance for the year will be more like an Rs. 160-170 crore debt from earlier Rs. 210-220 crores, because we don’t require additional home pass as of now. We want to focus more on modernising current home passes,” Gupta revealed.

In Q1 FY19, the company’s Capex was Rs. 50 crore in broadband business and around Rs 20 crore of capex in the cable TV business.

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