Category: DTH

Q1-2016: Subscription revenue growth, lower finance costs reduce Videocon d2h loss

BENGALURU: The addition of 6.1 lakh gross subscribers and 4.6 lakh net subscribers in Q1-2016 (quarter ended 30 June, 2015), coupled with higher average revenue per user (ARPU) for Q1-2016, resulted in a y-o-y 32.1 per cent growth in subscription revenue and 23.3 per cent growth in revenue from operations (TIO) in Q1-2016 for Videocon d2h.

On a q-o-q basis, subscription revenue increased 3.7 per cent, while TIO increased six per cent. The company also reported a marked fall in finance costs and consequently, the company’s loss in the current quarter more than halved to Rs 24.4 crore as compared to the Rs 55.8 crore in Q1-2015 and was less than a third of the Rs 75.7 crore in Q4-015.

Videocon achieved strong subscription revenue growth of 32.1 per cent to Rs 599.61 crore (90.5 per cent of TIO) in Q1-2016 as compared to the Rs 453.77 crore (84.4 per cent of TIO) in Q1-2015 and growth of 3.7 per cent as compared to the Rs 578.33 crore (92.5 per cent of TIO) in the immediate trailing quarter.

Note: 100,00,000 = 100 lakh = 10 million = 1 crore

TIO in Q1-2016 at Rs 662.83 crore was 23.3 per cent more than the Rs 537.65 crore in Q1-2015 and six per cent more than the Rs 625.27 crore in Q4-2015.

Average revenue per user (ARPU) in Q1-2016 at Rs 205.30 was 9.7 per cent more than the Rs 187.14 in the corresponding year ago quarter and was 1.5 per cent more than the Rs 202.17 in Q4-2015. (Conversion rate from 1 dollar = 62.59 Indian rupee for all the three quarters).

The company’s finance costs in Q1-2016 reduced 26.8 per cent to Rs 76.5 crore (11.5 per cent of TIO) as compared to the Rs 104.5 crore (19.4 per cent of TIO) in the corresponding year ago quarter and was an impressive 41.2 per cent lower than the Rs 130.1 crore (20.8 per cent of TIO) in Q4-2015.

Videocon d2h executive chairman Saurabh Dhoot said, “We are pleased to declare a strong set of results for the quarter ended 30 June, 2015 and are on track to achieve the guidance provided for fiscal 2016. With a strong subscriber growth outlook, DTH sector gaining market share over cable and an improving ARPU scenario; we believe we are just at the beginning of a multi-year strong growth opportunity.”

During this quarter, Videocon d2h added three proprietary channels and also set up an advertising team to sell ad inventory for the same. These channels are d2h nursery rhymes, d2h Cinema HD and a music channel. Additionally, it also added three Active services, namely, Active Kids, Active Games and Active Learning during the quarter, which have started getting traction from customers.

Dhoot added, “I am happy to share that we recently set up an advertising team to sell ad inventory on our own proprietary channels. We are beginning to see an encouraging response from multiple advertisers.”

Issuance of bonus shares

The board of directors of the company, at their meeting held on 22 July, 2015, determined that the Initial Performance Hurdle has been achieved and satisfied and hence has approved, subject to approval of Ministry of Information and Broadcasting and such other approvals and consents as may be required under the applicable regulations, the issuance of 23,360,000 equity shares (equivalent to 5,840,000 ADSs) to the shareholders of the company as of the date of the Contribution Agreement and the issuance of 3,999,984 equity shares (equivalent to 999,996 ADSs) to the sponsor by way of a bonus issue, in accordance with the terms of the Contribution Agreement and the Articles of Association of the Company. Further, Saurabh Dhoot also becomes entitled to receive 1,400,000 (equivalent to 350,000 ADSs) equity shares of the Company.

The Initial Performance Hurdle was that the last sales price of the Videocon d2h ADSs on NASDAQ (converted into Indian rupees on each such day at the Indian Rupee/U.S. Dollar Exchange Rate on such date) for 20 trading days in a 30-trading day period equals or exceeds 125 per cent of the Listing Price (i.e. price per ADS issued to the SEAC Distribution Record Holders converted into Indian rupees at the Indian Rupee/U.S Dollar Exchange Rate prevailing on the Closing Date, March 31, 2015).

Let us look at the other numbers reported by Videocon d2h

The company’s EBIDTA (operating profit) in Q1-2016 increased 26.3 per cent to Rs 187.43 crore (28.3 per cent margin) from Rs 148.45 crore (27.6 per cent margin) in Q1-2015 and increased 15.9 per cent from Rs 161.77 crore (25.9 per cent margin) in Q4-2015.

Videocon d2h total expenditure (TE) in Q1-2016 increased 20.3 per cent to Rs 618.1 crore (93.3 per cent of TIO) as compared to the Rs 513.7 crore (95.5 per cent of TIO) in Q1-2015 and increased 2.2 per cent as compared to the Rs 604.5 crore (96.7 per cent of TIO)

Videocon d2h’s operating expense in Q1-2016 at Rs 379.1 crore (57.2 per cent of TIO) was 22.7 per cent more than the Rs 309 crore (57.5 per cent of TIO) in Q1-2015 and was 4.2 per cent more than the Rs 363.7 crore (58.2 per cent of TIO) in Q4-2015.

The company says that its content cost as percentage of revenue in Q1-2016 was 37 per cent as compared to 32.7 per cent in Q1-2015 and 38.4 per cent in the immediate trailing quarter.

Videocon d2h’s selling and distribution expense in the current quarter increased 17.8 per cent to Rs 50.9 crore (7.7 per cent of TIO) as compared to the Rs 43.2 crore (8 per cent of TIO) in Q1-2015 and increased 10.4 per cent as compared to the Rs 46.1 crore (7.4 per cent of TIO) in Q4-2015.

Administrative and other expense in Q1-2016 increased 15 per cent to Rs 14.6 crore (2.2 per cent of TIO) as compared to the Rs 12.7 crore (2.4 per cent of TIO) in Q1-2015, but reduced by 42.3 per cent as compared to the Rs 25.3 crore (four per cent of TIO) in Q4-2015.

Employee Benefit Expense in Q1-2016 increased 26.6 per cent to Rs 30.9 crore (4.7 per cent of TIO) as compared to the Rs 24.4 crore (4.5 per cent of TIO) in Q1-2015 and was 8.4 per cent more than the Rs 28.5 crore (4.6 per cent of TIO) in Q4-2015.

Videocon d2h CEO Anil Khera said, “We believe around 10 crore homes will be up for grabs by digital cable and DTH operators in the next four – five years. DTH should gain higher market share in Phase III and IV of the Government of India digitization plan in comparison to the prior phases. We are excited and prepared to take on the significant subscriber growth opportunity ahead of us, as we approach the Phase III digitization deadline. While actual implementation could take time, we continue to believe the government has a strong intent to switch off analogue cable as per the plan.”

July 23, 2015
Videocon d2h expands HD offering to 37 channels

MUMBAI: Videocon d2h has expanded its high-definition (HD) offering to 37 channels by adding Star Movies Select HD and Fox Life HD on channel number 258 and 468 respectively.

The new channel launches on its platform continue to validate Videocon d2h’s commitment to providing Indian audiences with high-quality content across an array of genres and formats.

Star Movies Select HD will premiere two new films not previously released in India each month, in addition to airing a new movie everyday. Additionally, Fox Life HD features a slate of scripted and non-scripted content that is inspired by real life as well as appealing and appropriate for the entire family. Fox Life HD will be having multiple audio feeds in Hindi, Tamil and Bengali besides English.

Videocon d2h plans to continue to add more HD channels shortly, with an aim to have as many as 50 HD channels.

“We have been relentless in our pursuit to gratify our customers’ with an exceptional viewing experience. Videocon d2h’s substantial offer of wide range of HD channels is a testimony to that endeavour. We remain committed to expanding Videocon d2h’s channel offerings and content as a means to providing a superior viewing experience to our customers, augmented by innovative technology and the best customer service. It’s a simple plan that we believe will result in a major upgrade for India’s TV viewing public,” said Videocon d2h executive chairman Saurabh Dhoot.

Videocon d2h CEO Anil Khera added, “Videocon d2h has been extremely aggressive and innovative when it comes to technology upgrades, new content offerings and launching new services all in an effort to keep ahead of current industry trends. Fox Life HD with multiple audio feeds and Star Movies Select HD are two premium HD channels that bring even more quality content to our subscribers resulting in a superior viewing experience. Keeping both our promise to provide the best channels and content across all genres and our commitment to customer satisfaction has built a strong level of trust between our customers and Videocon d2h, and we value that relationship.”

July 20, 2015
Airtel Digital TV launches ‘Made in India’ set-top-boxes

MUMBAI: Airtel Digital TV, the DTH arm of Bharti Airtel, has launched its first indigenously manufactured set-top-boxes (STBs), which are aptly called ‘Made in India’ STBs.

Conceptualised and designed in India, the HD STBs will be manufactured at a facility in Pune (Ranjangaon) with an aim to match global technology standards to provide the best of experience to customers.

The boxes will serve HD users to begin with and soon all Airtel Digital TV’s set-top-boxes will be manufactured in India. This move makes Airtel Digital TV the latest corporate to join the Narendra Modi government’s Make in India initiative. The launch promotes an ecosystem that will drive indigenous manufacturing of DTH STBs empowered with production capabilities as well as technical expertise within India.

When asked about the initiative, Bharti Airtel DTH and media CEO Shashi Arora said, “With this we aim to reduce our imports and thus help drive employment and growth within the country. In the long run, cost synergies will further help us extend more benefits to our customers.”

Based on an in-house design by MyBox Tech, which is a subsidiary of Hero Electronix, and ST Microelectronics, a multinational manufacturer of Integrated Devices and semiconductors, the STBs will offer features including Full HD 1080p support, MPEG-4 video with Dolby Digital Plus Surround Sound, 5X picture clarity, unlimited recording (via USB-drive), and USB-based Wi-Fi connectivity for On-demand, Anytime TV and Interactive Gaming.

Welcoming this move by Airtel Digital TV, minister of state for Information and Broadcasting Rajyavardhan Rathore said, “It is great that Airtel Digital TV is aligning itself with our Make in India vision as this will certainly pedal the fast gaining momentum of the initiative further.”

Airtel Digital TV connection on these HD boxes will be available under various packages.

July 16, 2015
Videocon d2h targets advertising revenue; strengthens ad sales team

MUMBAI: Direct to home (DTH) operator Videocon d2h is looking at increasing its advertising revenues. In order to achieve this, the DTH operator will not just offer targeted advertising across its regional language and proprietary channels, but also launch new channels shortly.

In order to achieve the target, the operator has formed a new executive advertising team to be headed by Indian media sales experts.

The advertising initiative, which will target inventory opportunities on the Videocon d2h platform, comes in response to the positive feedback from the operators’ advertisers such as Volkswagen, Honda, Disney, Sony TV, Zee Group and Star Sports. Media buyers will also be able to advertise on Videocon d2h’s home channel and info bar when changing channels.

The new Videocon d2h advertising sales team is led by media veteran Tanmay Srivastava, who joins the company after serving as MSM Network head, advertising sales. Reporting directly to Videocon d2h deputy CEO Rohit Jain, the operator has also recruited two other senior executives with extensive local advertising sales experience.

The operator began offering advertising on its platform only last year. The inaugural effort focused on its home channel and generated approximately US$1.5 million in fiscal 2015. With its expanded initiative, Videocon d2h is anticipating substantially bigger advertising revenue gains in fiscal 2016.

Videocon d2h CEO Anil Khera said, “Today’s announcement reconfirms our commitment to continuously identify growth opportunities for our shareholders. With the goal of generating new revenue through an expansive, targeted ad sales platform, we have assembled a solid team that is more than capable of moving this initiative forward for us. We look forward to being a part of their success in tapping Videocon d2h’s reach of 65 million consumers with exciting, new options, and we anticipate the advertising program to expand even further as we launch our own branded channels in the future.”

Silver Eagle Acquisition founder Harry Sloan further added, “During the recent NASDAQ listing process, we focused on advertising sales as one of the important high margin growth opportunities. As we look to roll out a bouquet of new branded channels we will be able to use the extensive reach of our platform to turn ad sales into bottom-line dollars. This is a programme that will benefit our growing consumer base, as well as those advertisers seeking their stake in the lucrative Indian TV market. Given the exciting growth in overall Indian advertising and the television ad market in India, we are very pleased to see the development of an effective advertising sales force implemented quickly and effectively.”

July 9, 2015
Videocon d2h adds two new Kannada channels

MUMBAI: Direct to home (DTH) operator Videocon d2h has added two new Kannada channels: Raj News Kannada and Raj Musix Kannada.

While Raj News aims to provide local news more accurately by establishing bureaus in every district of Karnataka, Raj Musix is a Kannada speciality music television channel from the Raj Group airing multi lingual content.

Videocon d2h executive chairman Saurabh Dhoot said, “We want to offer the whole gamut of channels and services empowering the consumer to opt for his preferred choice of language. We will continue to focus on strengthening our regional content offering, thus keeping us at the forefront.”

Videocon d2h will offer Raj News Kannada and Raj Musix on LCN 691 and 673 respectively.

Videocon d2h CEO Anil Khera said, “We believe in delivering the best to our customers and are hopeful of achieving better penetration, through the addition of these channels in the interior regions of Karnataka, where the appetite for regional content is much more. Redefining the entertainment quotient with an array of channels and services is our focus area and we will be adding many more channels soon.”

June 29, 2015
Videocon d2h unveils educational TV initiative for kids

MUMBAI: Videocon d2h has unveiled a new initiative aimed at preschool and elementary school aged children. The company has launched Smart Services, a value-added bouquet of learning activities and games available exclusively to Videocon d2h subscribers. This banner includes Smart Learning, Smart Kids and Smart Games, all available on subscription basis.

Smart Learning, targeting school aged children under 14, will broadcast science videos and interactive ways to learn English. Smart Kids will cater to toddlers and kindergarten kids with nursery rhymes and stories. Each of Videocon d2h’s Smart Services will be offered at a subscription rate of Rs 45 per month.

In addition, one more value-added service is expected to launch soon for school going children. Called Smart Education, it will also feature the educational curriculum of various boards.

“We strive to provide the best of education based entertainment to our subscribers, especially our young audience,” said Videocon d2h executive chairman Saurabh Dhoot. “Keeping this in mind, we have launched the SMART Services bouquet, our learning based entertainment content. The content is specially designed and handpicked to provide the best of learning to across all ages,” Dhoot added.

Videocon d2h CEO Anil Khera asserted, “Videocon d2h is launching its Smart Services offering to capture the imaginations of kids while helping them learn. The rich content is designed to help change the TV viewing of children to a learning viewing that brings joy and fun to children through stories and easy-to-comprehend videos.”

June 25, 2015
Sandesh News hops on Videocon d2h

MUMBAI: Direct to home (DTH) operator Videocon d2h, has added Gujarati regional news channel Sandesh News on its platform. Sandesh News is a 24/7 news and current affairs channel. With this, Videocon d2h now has eight Gujarati channels and services.

Videocon d2h offers 500 channels and services and host of regional channels. Sandesh News is available on the d2h platform on LCN 942.

Videocon d2h executive chairman Saurabh Dhoot said, “Addition of this new channel Sandesh News reconfirms our endeavour to add the best of regional channels, catering to our ever growing subscriber base. We look forward to provide every subscriber with a choice of selecting their favourite channels from our vast array of channels and services, thus keeping us at the forefront.”

Videocon d2h CEO Anil Khera added, “Every new channel added on our platform is a valuable addition to our regional content. This addition of Sandesh News will further encourage viewers to opt for a variety of content. Redefining the entertainment quotient with an array of channels and services is our focus area and we will be adding many more channels soon.”

June 23, 2015
Digital fallout: DTH cos set to lose, broadcasters poised to reap benefits

MUMBAI: Change is constant and change is good…. however, it seems like change isn’t good for all. While the proliferation of digital platforms giving an impetus to online videos, will turn out to be a boon for broadcasters, direct to home (DTH) operators however, are set to lose out.

According to a research report by Bank of America-Merrill Lynch, just like in the West, online video content will disrupt India’s Pay TV market. While broadcasters will benefit because of ad supported content monetisation, DTH players will suffer because of pressure on ARPUs. Moreover DTH companies are also poised to lose most as the price-sensitive Indian consumers will refrain from paying premium for content on live television when they have online alternatives.

Broadcasters are well placed to monetise content on digital platforms as it only increases the opportunities. As a result, ad revenues are expected to improve following a pick up in economy. The report states that broadcasters will be able to improve their content monetisation through increased ad revenues and better declaration of subs in a digitised environment.

For DTH companies, despite digitisation delay, there will be improvements in the average revenue per user (ARPU) driven by the following factors: 1) HD channel penetration increase; 2) Differential tariff hikes; and 3) MSOs hiking tariffs to maintain profitability – offering DTH players more headroom to raise tariffs.

Creating a scenario comprising Zee TV (broadcaster) and Dish TV (DTH), Bank of America-Merrill Lynch’s analysis suggests that the overall risks are skewed to the upside for broadcaster Zee and to the downside for DTH operator Dish TV.

According to the report, Zee has underperformed the markets by eight per cent year-to-date (YTD) on concerns about the loss in market share due to channel fragmentation and investments in new channels. “Post the share-price underperformance, we see the risk-reward as favourable since, in our view, the market is now factoring in all the risks, but not giving full benefits of strong ad growth, monetisation of new content and digitisation benefits,” the report states.

Factoring in the positives for Dish TV, the report says that though digitisation is inevitable, the expectations on timelines are optimistic and complete benefits of digitisation will be seen only by FY2020-21. However, over the next 12 months, ARPU improvements are expected due to: 1) MSOs hiking tariffs to maintain margins; 2) Increased penetration of HD channels; and 3) Differential price hikes in urban areas. “However, Dish TV has outperformed the market by 65 per cent YTD, and we see most of the positives are priced in,” says the report.

The upside of digitisation will be gradual. Citing risks and benefits of digitisation, the report says that it sees the risk of distributors (MSOs and DTH players) not realising the full potential of digitisation as the pace of roll out is slower than what the market is anticipating. Moreover, by the time the full benefits of digitisation are realised, the new-age video disruptors, internet-enabled smart devices like mobile, TV and PC will start eating into the revenues of Pay TV and MSOs like they have done in the West. Additionally, though phase-I and II of digitisation is complete, the expected benefits have not flowed to the players because of issues like MSOs/LCOs tussle and absence of customer billing. “There has been some progress on resolving the issues but it has been slow. These problems will only increase with roll out in phase-III and IV areas,” the report states.

In the next few years, the Indian media sector is expected to evolve as digitisation gradually picks up, fragmentation of channels increases and all companies (broadcasters, DTH and MSOs) evolve their business models in face of online content proliferation.

Positive on broadcasters: Content still the king

According to the report, companies like Zee will benefit from an improvement in ad growth (led by GDP uptake) and expect to benefit from content fragmentation as it is one of the better companies leveraging this trend. “Over time, as traffic will shift to smart devices, we expect consumption of video content to increase. This presents increasing opportunities for broadcasters to monetise content. With improving economic activities, digitisation rollout and pressure on distributors’ P&L, we expect both advertisement and subscription revenues of broadcasters to increase. On the other hand, we believe that given the reluctance of Indian consumers to pay for online consumption, content on smart devices (smartphones, PCs, tablets) will be monetised primarily through advertisements,” the report states.

DTH: Digitisation is gradual; ARPU improvement to flow in

Despite slow digitisation, companies like Dish TV are likely to improve their ARPUs and EBITDA margins over next 12-18 months. The ARPU improvement will be led by the following factors: 1) MSOs facing some pressure from broadcasters to hike tariffs allowing DTH operators to follow them; 2) Increased penetration of HD channels; and 3) Players like Dish TV implementing differential pricing across cities to improve realisations and monetising on its “Zing” offering.

MSOs: Broadband push is the next big story

With the ongoing tussle between MSOs and LCOs, the full benefits of digitisation will come gradually for MSOs. As a result, MSOs are likely to focus on other revenue streams like broadband subs. According to checks carried out by Bank of American-Merrill Lynch, there’s increasing focus by MSOs to improve their broadband coverage, which would help cross-sell services overtime and have direct control over subs. The major MSOs have already started experimenting with high-speed broadband in high-density urban areas, and slowly they will start rolling out in Tier-2 and Tier-3 cities.

Key risks:

1) Economy not picking up: Any slower-than-expected economic uptake may lead to material downgrades to our consensus ad revenue numbers for Zee.

2) LCOs/MSOs tussle unable to reach a solution: Continued tussle between LCO and MSO (LCOs are unwilling to share consumer details with MSOs in order to guard their turf) will impact ARPU improvements for the sector.

3) Rise in piracy: With the proliferation of online content and new mediums of consumption, we may see a rise in piracy. In such a scenario, it will impact the entire industry negatively as it would be difficult to monetise the content effectively.

June 22, 2015
Videocon d2h re-appoints Ernst & Young India as internal auditor

MUMBAI: Indian direct to home (DTH) operator Videocon d2h has re-appointed Ernst & Young LLP, India for the fiscal year ending 31 March, 2016 to support it in performing internal audit and testing of internal controls over financial reporting for the company.

Ernst & Young LLP, India has served as the internal auditor of the company since 16 February, 2015.

Videocon d2h executive chairman Saurabh Dhoot said, “The re-appointment of Ernst & Young LLP, India will help ensure that the company continues to maintain rigorous internal financial and accounting controls and procedures, and produce accurate financial statements on a timely basis, in line with international best practices.”

Videocon d2h proposed director Jeff Sagansky added, “Following the NASDAQ listing, the company has established international best practices for corporate governance and policies, including those pertaining to related party transactions and internal controls, and are pleased that Ernst & Young LLP, India will continue to help us in this area.”

Ernst & Young LLP, India partner Ashish Pherwani said, “We are happy to partner with Videocon d2h in its journey towards improved practices and controls in an environment of competition and growth.”

June 22, 2015
Apollo sells 4.4% stake in Dish TV for Rs 486 crore; Citigroup buys 2.6 crore shares

MUMBAI: Apollo India Private Equity II (Mauritius) has raised approximately Rs 486 crore via a 4.4 per cent stake sale in Essel Group’s direct to home (DTH) company Dish TV. The company sold 4.7 crore shares in Dish TV at Rs 103.72 per share on the Bombay Stock Exchange (BSE) on 19 June, 2015.

Of the shares sold by Apollo, Citigroup Global Markets Mauritius snapped up 2.6 crore shares for Rs 103.65 per share totalling to approximately Rs 268.5 crore.

As on 31 March 2015, Apollo held an eight per cent stake in Dish TV through its outstanding global depository receipts (GDR). Apollo had acquired these shares at Rs 39.80 for a total consideration of Rs 465 crore (or $100 million) in 2009. Moreover in April this year, Apollo converted a part of the GDRs into equity shares and had sold it for Rs 262.5 crore via an open market transaction.

On 19 June (Friday), Dish TV India closed at Rs 105.60, down Rs 4, or 3.65 per cent on the bourses. The share touched its 52-week high Rs 117.25 and 52-week low Rs 55.40 on 17 June, 2015 and 26 September, 2014, respectively.

June 20, 2015