Sun Direct rev jumps 12% to Rs. 1,139 cr in 10M FY18
MUMBAI: Kalanithi Maran-promoted direct to home (DTH) platform has been growing the scale of operations with higher activations and growth in subscription income.
During 10 months FY18, the total income of the company further grew at an annualised rate of about 12% to Rs. 1,139 crore.
Though customer acquisition has been healthy in the past, the company had witnessed high churn in the customer base mainly due to a lower number of channels offered, according to a report by Care Ratings.
Post the availability of additional transponder capacities the company has been able to improve its customer acquisition as well as reduce churn. Sun Direct has been focusing its operations primarily in the Southern region with the share of South India in the net subscriber base high at 98% during FY17.
The total income of Sun Direct grew by about 9% year-on-year to Rs. 1,215 crore in FY17 from Rs. 1,117 crore in FY16 driven by growth in both activation and subscription income.
Though the company started generating cash profits from FY13, it continued to incur losses till FY16. The promoters have been providing financial support to the company by infusing equity in the past. The company had accumulated losses of Rs. 2,706.74 crore and hence a negative net worth as on 31 March 2017.
During FY17, the company reported a net profit of Rs. 44.22 crore and going forward, Sun Direct expects to support the future capex (for the purchase of CPE) through internal accruals and external debt with no further dependence on promoter’s contribution.
The company plans to incur about Rs. 1,100 crore during FY18 – FY20 funded by debt of Rs. 450 crore, out of which Rs. 100 crore will be availed depending on the requirement of the company.
Sun Direct is expected to add 80 SD channels and 10 HD channels during Q1FY19. Sun Direct is also shifting to HEVC encoding as against MPEG 4 encoding used earlier which will help the company broadcast a higher number of channels within the existing bandwidth.
The DTH operator currently uses 12 transponders out of which 8 transponders are from ‘MEASAT’ and 4 transponders from ‘GSAT’. Out of the above, 7 transponders, 4 transponders from ‘MEASAT’ and 3 transponders from ‘GSAT’, were added during FY18.
With the addition of the transponders, the company has been able to increase the number of SD channels offered to 256 channels from 207 channels earlier and a number of HD channels offered to over 69 from about 15 channels.
Care has reaffirmed its BB+ rating to Sun Direct as it believes that the DTH operator is expected to sustain the growth in its net subscriber base and offer a wide array of channels which may aid in improving ARPUs and thereby generate higher cash accruals in the medium-term.
It further stated that the outlook may be revised to “Stable” if the Sun Direct is not able to generate envisaged cash accruals or if there is any adverse change in the regulatory or competitive environment.
Sun Direct is promoted by Kalanithi Maran and his wife Kaveri Kalanithi who together hold 80% stake in Sun Direct. South Asia Entertainment Holding Ltd (SAEHL), a 100% subsidiary of Astro All Asia Networks Plc (Astro), holds 20% stake in Sun Direct. Astro is a leading DTH operator in Malaysia.
Sun Direct holds 10% share of the active pay DTH market. According to a Telecom Regulatory Authority of India (TRAI) report, the active subscriber base of pay direct to home (DTH) has increased 2.22% to 67.56 million for the quarter ended 31 December as against 66.09 million in the trailing quarter.