According to the brokerage, the move by Tata Sky may put further pressure on ARPUs as subscribers may activate their connections only when they have content to watch, reducing operating leverage for the DTH providers, while their costs will not change despite a consumer opting to use the service for only part of the month.
Moneycontrol Bureau Shares of Dish TV lost 4 percent intraday on Thursday. Goldman Sachs advises to sell it stating rival Tata Sky's recently launched scheme may hurt Dish TV's average revenue per users (ARPUs).
Tata Sky has recently launched a daily recharge coupon for its direct-to-home (DTH) subscribers which allows users to recharge for Rs 8 (up to Rs 100) for a single day access. According to the brokerage, the move by Tata Sky may put further pressure on ARPUs as subscribers may activate their connections only when they have content to watch, reducing operating leverage for the DTH providers, while their costs will not change despite a consumer opting to use the service for only part of the month. Goldman Sachs believes this pricing will have two implications over the medium term for Dish TV through higher competition in semi-urban and rural areas as traditionally urban operators, such as Tata Sky, make a more concerted rural push and potential dilution in ARPU for the existing operators, if they were to match the offers made by Tata Sky.
"Tata Sky is offering this scheme to make a greater push into Phase 3 & Phase 4 markets, where the deadline for compulsory digitisation is coming up in Dec 2015 and Dec 2016, respectively. Traditionally, Tata Sky has a lower share in these markets as compared with other DTH competitors, such as Dish TV. Tata Sky is promoting this scheme with regular advertising during the ongoing IPL season 8, which tends to be a high viewership broadcast," it says in a report. At 13:35 hrs Dish TV India was quoting at Rs 79.90, down Rs 3.50, or 4.20 percent on the BSE.
Resource :-http://www.moneycontrol.com/news/buzzing-stocks/dish-tv-sinks-4-as-tata-skys-new-scheme-may-hurt-arpus_1359328.html
Moneycontrol Bureau Shares of Dish TV lost 4 percent intraday on Thursday. Goldman Sachs advises to sell it stating rival Tata Sky's recently launched scheme may hurt Dish TV's average revenue per users (ARPUs).
Tata Sky has recently launched a daily recharge coupon for its direct-to-home (DTH) subscribers which allows users to recharge for Rs 8 (up to Rs 100) for a single day access. According to the brokerage, the move by Tata Sky may put further pressure on ARPUs as subscribers may activate their connections only when they have content to watch, reducing operating leverage for the DTH providers, while their costs will not change despite a consumer opting to use the service for only part of the month. Goldman Sachs believes this pricing will have two implications over the medium term for Dish TV through higher competition in semi-urban and rural areas as traditionally urban operators, such as Tata Sky, make a more concerted rural push and potential dilution in ARPU for the existing operators, if they were to match the offers made by Tata Sky.
"Tata Sky is offering this scheme to make a greater push into Phase 3 & Phase 4 markets, where the deadline for compulsory digitisation is coming up in Dec 2015 and Dec 2016, respectively. Traditionally, Tata Sky has a lower share in these markets as compared with other DTH competitors, such as Dish TV. Tata Sky is promoting this scheme with regular advertising during the ongoing IPL season 8, which tends to be a high viewership broadcast," it says in a report. At 13:35 hrs Dish TV India was quoting at Rs 79.90, down Rs 3.50, or 4.20 percent on the BSE.
Resource :-http://www.moneycontrol.com/news/buzzing-stocks/dish-tv-sinks-4-as-tata-skys-new-scheme-may-hurt-arpus_1359328.html
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