MSO Asianet aims to grow broadband biz with Rs 200 cr capex in FY18-19

MUMBAI: Kerala-based multi system operator (MSO) Asianet Satellite Communications Ltd (ASCL) has planned a capital expenditure (capex) of Rs 200 crore in the broadband business over FY18 and FY19.

The Hathway Cable and Datacom-owned company is providing broadband service through GPON fiber-to-the-home (FTTH) technology.

ASCL already has a strong broadband business which is more profitable than its cable TV business due to higher average revenue per user (ARPU) and is mainly driven by primary subscribers.

The broadband segment’s contribution to EBITDA in FY17 was about 40%.

The ASCL management expects an increase in the wireline penetration of the broadband segment, a higher ARPU than that of the cable business and a rise in the volume of data consumption to drive the growth of the broadband business.

Being a dominant player in Kerala, the company is also strategically positioned to cross-sell its broadband services to existing primary cable services subscribers.

ASCL’s cable TV subscriber base stands at 1.36 million. Over 50% of its total cable TV subscribers are secondary subscribers.

The implementation of the digital addressable system (DAS) in Phase 4 areas is likely to help the MSO in increasing the ARPU.

ASCL expects its phase III/IV-blended monthly ARPU per secondary subscriber to increase to about INR60 by FYE18. In the first of FY18, the ARPU increased to Rs 30 from Rs 22 in FY17 and Rs 9 for FY16.

ASCL’s credit ratings have been upgraded due to expectations of an improvement in operating performance in the cable segment from FY18 due to DAS implementation.

The company posted an EBITDA of Rs 81.7 crore during April-October 2017 while the EBITDA margin stood 27%. It company booked revenue of Rs 305.48 crore for the period.

In FY17, the company’s net profit jumped to Rs 53.6 crore from Rs 40.2 crore. During the period, EBITDA was Rs 145.7 crore compared to Rs 138.2 crore in the previous.

EBITDA margin declined at 32% versus 34.2% due to lower activation income and higher employee costs.

However, excluding activation income, EBITDA margin was higher on a year-on-year basis at 27% in FY17 compared with 22% in FY16.

The revenue increased 10% YoY to Rs 446.2 crore from Rs 404.6 crore, driven by a 17% YoY and a 31% YoY rise in cable subscription and broadband income levels, respectively.

The rise in EBITDA led to an increase in cash flow from operations to Rs 140.3 crore in FY17 from Rs 121 crore in FY16. ASCL’s fund-based working capital limit utilisation was 95% during January-October 2017.

Started in 1993, ASCL is the largest cable network services company in Kerala. The company was fully taken over by the Rajan Raheja group in 1999-2000. The company had recently launched an over the top (OTT) service Asianet Mobile TV+.

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