BENGALURU: Is FY-2015 the
inflection point for direct to home (DTH) companies in India? The answer seems
yes, if one were to go by the financials declared by three listed operators for
the quarter and year ended 31 March, 2015 (Q4-2015 and FY-2015 respectively) –
Airtel Digital TV, Dish TV and Videocon d2h. And the players are gung-ho about
the future. Subscriber growth and higher ARPUs (Average Revenue Per User) are
some of the factors that have brightened the picture for this segment of the
carriage industry in fiscal 2015.
Note: 100,00,000 = 100 lakh = 10
million = 1 crore.
This report covers only three of
the seven DTH service providers in India since the other four – Reliance
Digital TV, Sun Direct (about 97 lakh subscribers as on 31 March, 2015), Tata
Sky and DD Free Dish are not listed on the bourses and their financial numbers
are not available.
The Numbers
Dish TV
Dish TV’s standalone and
consolidated net Total Income from Operations (TIO) in FY-2016 at Rs 2781.64
crore was 10.9 per cent more than the Rs 2508.97 crore in FY-2014. Standalone
TIO in Q4- 2015 at Rs 754.72 crore grew 18.5 per cent as compared to the Rs
636.91 crore in the corresponding year ago quarter and was 10.3 per cent more
than the Rs 684.26 crore in Q3-2015.
According to Dish TV, the DTH sector is a
direct beneficiary of a positive consumer sentiment. The company achieved
strong subscriber growth of 1.5 million net subscribers during the year. Fiscal
2015 also saw Dish TV swing to net profit, a first for any DTH company in
India.
The biggest among the three in terms of
revenue as well subscribers, Dish TV at the close of FY-2015, reported
standalone net profit after tax (PAT) of Rs 35.01 crore in Q4-2015 and a
standalone PAT of Rs 1.01 crore in FY-2015 as compared to a standalone loss of
Rs 154.21 crore in FY-2014. For Q3-2015, Dish TV’s loss was just Rs 2.87 crore
as compared to double-digit crore loss numbers in the previous or like-to-like
quarters. Dish TV also doubled its subscriber growth to 15 lakh in FY-2015 as
compared to the previous year. As on 31 March, 2015, the company reported a net
subscriber base of 1.29 crore, having added 4.04 lakh subscribers in the last
quarter of 2015.
Dish TV also reported higher ARPU of Rs 179 in
Q4-2014 as against Rs 177 in Q3-2015 (1.13 per cent increase in ARPU) and was
5.3 per cent higher than the annual ARPU of Rs 170 reported in Q4-2014.
“As digitization spreads far and wide, we
continue to believe that there is sufficient headroom to further explore price
differentials between key urban markets and their rural counterparts. All pack
prices, for new as well as existing subscribers of Dish TV, have been moved by
Rs 10 each in the 42 cities under phase I and II. We are confident that pack
price hikes, higher HD uptake, as well as industry level developments such as
initiation of packaging in cable will be key contributors to ARPU expansion
going forward,” said Dish TV managing director Jawahar Goel.
Post a successful absorption of
higher pack prices in Delhi, Mumbai, Pune and Kolkata, Dish TV initiated
another price change during the current month. In less than three months since
it was first introduced, differential pricing – an industry first from Dish TV
was rolled-out in the balance 38 cities covered under DAS phases I and II with
effect from midnight on 12 May, 2015.Last year Dish TV launched a second brand,
Zing, in the Indian DTH space. A resounding success, Zing cemented Dish TV’s
supremacy in the DAS Phase 3 and 4 markets with custom-made content, hardware
and service packages for the regional audience, says the company.
Airtel Digital TV Services
Airtel’s Digital TV Services (DTH
segment) revenue grew 19.2 per cent in FY-2015 to Rs 2475.9 crore from Rs
2077.1 crore in FY-2014. The segment reported 11.8 per cent growth in number of
subscribers with 100.73 lakh subscribers on 31 March, 2015 as compared to the
90.12 lakh subscribers at the close of the previous year. ARPU in FY-2015 at Rs
214 was five per cent more than the Rs 203 in FY-2014. The segment reported
slightly higher monthly churn of one per cent as compared to 0.9 per cent in
FY-2014.
The DTH segment reported an operating profit
of Rs 8.1 crore in Q4-2015 as compared to an operating loss of Rs 36 crore in
the immediate trailing quarter. For FY-2015, Airtel DTH reported a lower
operating loss of Rs 158.1 crore, for FY-2014, operating loss was three times
more at Rs 481.2 crore.
EBIDTA and EBIDTA margins in FY-2015 at Rs
675.2 crore (27.3 per cent of total revenue) were more than double (2.02 times)
the Rs 334.7 crore (16.1 per cent of total revenue) in the previous year.
Videocon d2h
Coupled with higher ARPU for
FY-2015 at Rs 196, and Rs 202 in Q4-2015, Videocon d2h reported 32.5 per cent
growth in revenue from operations in FY-2015 at Rs 2337.7 crore as compared to
the Rs 1764.4 crore in FY-2014. The company’s subscription revenue increased
38.3 per cent in the current year to Rs 2058.1 crore from Rs 1487.7 crore in
the previous year.
Videocon d2h says that it was able to push
through an inflation linked ARPU increase in February 2015. As a result,
Q4-2015 ARPU was Rs 202, up 11.7 per cent from FY-2015.
Videocon d2h closed fiscal 2015 with 101.8
lakh subscribers as compared to 84.4 lakh in the previous year. It claims
market leadership in subscriber growth in FY-2015 with 26.4 lakh gross
subscribers and 17.4 lakh net subscriber additions. Subscriber churn per month
increased fractionally in FY-2015 to 0.8 per cent as compared to 0.76 per cent
in the previous year.
The company reported lower net
loss in FY-2015 at Rs 272.7 crore as compared to the Rs 319.5 crore in the
previous year. Adjusted EBIDTA increased 55.3 per cent in the current year to
Rs 609.1 crore (margin 26.1 per cent) from Rs 319.5 crore (margin 34.1 per
cent), the company said in its earnings release on NASDAQ.
Videocon d2h CEO Anil Khera said,
“The Pay TV segment in India is positioned for extraordinary growth over the
next few years with millions of new TV homes being created on account of the
strong economic outlook in India as well as the Government of India's
initiative to roll out its digitalization mandate across the country. We
believe that 9 to 10 crore homes will be making the switch to digital
platforms, which will be available to the DTH and digital cable operators. We
are well positioned to benefit from this and we believe we will take the
largest share of this opportunity, as we have in the past. With strong economic
growth outlook for India, overall media sector is expected to grow in the years
to come. We believe this will help grow ARPU, TV penetration and increase HD
uptake leading to stronger revenue growth for Pay TV in general and Videocon
d2h in particular."
End points
The last quarter of fiscal 2015
(Q4-2015) has shown better than average results in the case of all the three
DTH players examined in this report. PAT in Q4-2015 eliminated the loss Dish TV
incurred in the first three quarters of FY-2015. In the case of Airtel DTH
segment, EBITDA for Q4-2015 increased to Rs 207.8 crore as compared to Rs 96.7
crore in the corresponding quarter last year. The reported EBITDA margin
improved significantly to 32.7 per cent in Q4-2015, as compared to a margin of
17.9 per cent in the corresponding quarter last year.
As mentioned above, Airtel DTH turned EBIT
positive to Rs 8.0 crore in the current quarter, as compared to EBIT loss of Rs
110.7 crore in the corresponding quarter of last year. Comparable numbers for
Videocon d2h have not been made available since the company debuted on NASDAQ
on 1 April, 2015 and has disclosed only a limited amount of information about
its annual numbers.
The Indian carriage universe has 16.8 crore
households. DTH operators have continued to focus on improving realisations by
increasing penetration of HD channels, premium channels and value added
services (VAS) according to the FICCI-KPMG Indian Media and Entertainment
Industry Report 2015. However, they may have to rework their channel packages
to be more relevant and affordable for phases III and IV subscribers. A case in
point mentioned above is Dish TV’s sub-brand Zing, which caters to specific
linguistic needs of subscribers and offers regional specific packs as a part of
all available packs.
Also, all major DTH operators have launched
apps for mobiles and tablets through which subscribers can watch live TV for an
additional fee and DTH operators have the advantage of monetising these viewers
because of their existing payment relationships with their subscribers.
The FICCI-KPMG 2015 report also says that
battle for subscribers in phases III and IV of DAS in India is expected to be
more keenly fought between MSOs’ and DTH players. While DTH players managed to
get only 20 to 30 per cent of the subscribers converting from analogue to
digital in phases I and II, they are in a much better position in phases III
and IV due to inherent technology advantage of DTH in sparsely populated areas
and also due to their balance sheets being healthier than the MSOs’.
The Ministry of Information and
Broadcasting extended the deadlines for phases III and IV to 31 December, 2015
and 31 December, 2016, respectively, and there could be another delay by 12
months according to experts, which means that phase IV rollout could complete
only at the end of 2017 or even 2018. The benefits of digitisation in these
phases in terms of improved addressability and ARPU is expected to take much
longer. At the end of 2019, the FICCI-KPMG report expects digital cable
subscriber and DTH subscriber ratio to be 55:45 with 9.4 crore digital cable
subscribers and 7.6 crore DTH subscribers.
HITS (Headends in the Sky), if it takes off
even in a small way, could affect the fortunes of both the DTH and the cable TV
industry. Let’s wait and watch how the Hinduja Group, which has a license to
launch HITS and is a major player in the cable TV business, plays this out.
Jain TV, the other licensee for HITS, has made a miniscule dent. IPTV is still
at less than an infancy stage in the country.
If DTH companies can sustain, innovate in
technology and offerings and grow from here, FY-2015, and maybe Q4-2015 could
really be the turning point when at least one segment of the carriage business
in India has started making money. Only time will tell…
Source: http://www.indiantelevision.com
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