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  • IPL media rights value crosses Rs 43,000 crore on day one of e-auction

    IPL media rights value crosses Rs 43,000 crore on day one of e-auction

    Mumbai: The Indian Premier League (IPL) media rights value has surpassed the expectation by crossing Rs 43,000 crore (over $5 billion) on day one of the e-auction held on Sunday, as per reports. The rights are for 2023-2027. The value is more than 2.5 times the base price set at Rs 32,800 crore.

    The highly anticipated auction that was first announced on 29 March is expected to bring the Board of Control for Cricket in India (BCCI) an Rs 50,000-60,000 crore in revenues, as per some estimates. It is due to the high demand for the media rights. The contenders bidding for the digital rights are Disney Star, Sony Pictures Networks India and Viacom18. The bidders for digital rights include Zee Entertainment Enterprises, Disney+ Hotstar and Reliance Jio.

    Media reports indicate that Package A which is for India TV rights is at Rs 57 crore a game while Package B which is for India digital rights is at Rs 48 crore a match. So the per match value is already over Rs 100 crore. The base price for Package A was Rs 49 crore a match while for Package B it was Rs 33 crore a match. 

    Star India had paid Rs 16,347.5 crore in 2017 for the rights for five years. This time the BCCI doubled that sum as the base price. Reports indicate that Disney Star, Reliance, Sony, Zee, Times Internet and Fun Asia are participating. But only the first four parties are said to be bidding for Package A and Package B. In total, there are four packages. Package C is for the digital realm and involves 18 games on a non exclusive basis. It has a base price of Rs 11 crore a match. Package D is a rest of the world deal. This has a base price of Rs 3 crore a match.

    In the e-auction process nobody including the BCCI knows who is making a bid. Only the bid amounts come up on the screen. Mjunction is conducting the e-auction.

    Tech platforms like Amazon chose not to take part. The bidding will continue for Monday as well.

    This year BCCI has decided not to offer an option for a composite bid to acquire both the TV and digital media rights for the IPL. This decision has been taken to extract the maximum value for both the media rights. This means that TV broadcast rights are sold at a base price of Rs 18,130 crore for five years or Rs 49 crore per match and digital broadcast rights are sold separately at a base price of Rs 12,210 crore for five years or Rs 33 crore per match.

    Meanwhile, the former IPL chairman, commissioner Lalit Modi thinks that the rights could fetch $8-10 billion. “Everybody is throwing numbers on the table. But if you have to listen or believe in one number, then it is truly yours. I predict that this new IPL media rights tender will fetch close to 8 to 10 billion dollars. I believe this is the value of a genuinely global and world-class product” he wrote in a blog post.

    “I am confident that this value will match the fun on the field with several close contests and a lot richer talent bursting through with their performances.

    “The 2022 season has already provided us with so much joy with young fast bowling talent. Imagine this was possible in the first entire season with 10 sides. What could be the case with all teams playing each other twice? That would double the excitement and is the reason for my optimistic assessment of the increased value of media rights.”

    “The explosion in the digital space, which we first explored briefly back in 2010, is now a reality. Every life is dictated by the mobile phone and IPL will be no different. Linear TV is still very much the lifeline for an Indian audience. So that is going nowhere. Now add the digital boom and the strength of Linear TV, and we have close to 10 billion dollars!”

    But he did note that there would have been more innovations had he carried on. “Back in 2010, when I travelled to the US with my core group, little did anyone know then about just what I was planning. We went to the Google office and came back with a win-win deal. The first-ever cricket live streaming happened on YouTube in 2010, with a dedicated fun feed. This fun feed provided behind-the-scenes content that was not visible on TV. This was a landmark moment for the coverage of the IPL and that too in its third year. If I had carried on, we would have come up with more innovations. We would not have had to wait 12 years for Google to pick up ITT for broadcast starting from the 2023 season.”

    “Of course, better late than never because IPL on YouTube was a moment to savor, which we all enjoyed being a part of. That YouTube arrangement was just one of the innovations we attempted and succeeded in.”

    He noted that when the IPL was conceived back in 2007, there were a lot of naysayers. “Will this work? Why would companies own teams? What about the auction? Isn’t it immoral? We had all these questions thrown at us right at the start. But we knew just what we were aiming for. We had a lot of friends to thank for believing in our product.”

    “Today those very people have grown into massive cricket business houses investing in leagues worldwide, like what we have with Knight Riders! There are others also, like the GMR and Reliance, who are keen to diversify into other leagues. It is all due to the success of the IPL that these companies have the belief in expanding their vision and growing in other territories. But nothing will be bigger than their IPL investment, ever!”

    A latest report by Media Partners Asia forecasts that sports rights investments in India will grow at 10.1 per cent CAGR (compound annual growth rate) bolstered by demand for cricket, led by the IPL.

  • Mobile customer ARPUs to cross Rs 200 by end of the year: Sunil Mittal

    Mobile customer ARPUs to cross Rs 200 by end of the year: Sunil Mittal

    Mumbai: The board of Bharti Airtel on Sunday announced that it would raise Rs 21,000 crore through the issuance of equity shares available on a rights basis to eligible shareholders of the company. “This is the need of the hour for the company to accelerate from business as usual and capture a once-in-a-lifetime opportunity,” noted Bharti Airtel, chairman, Sunil Mittal.

    Mittal acknowledged that the company is loaded with extraordinary debt both from AGR and spectrum dues and they are raising capital not just to pay off the dues but also invest more in building 5G capability, gain market share in mobile services, grow FTTH business and expand data centre business. “In two-three years you will see Airtel become much more comfortable with the debt on its balance sheet,” he remarked.

    Mobile network expansion

    The company will continue to continue to upgrade spectrum which is the lifeline of the telecom industry and requires heavy capital commitment, said Mittal. The existing spectrum licenses need to be renewed in 2023 but their cost is marginal, he noted.

    “15 per cent of devices in India are 5G enabled and price points for 5G devices are coming down,”  he observed, adding that “The government should ensure that pricing of spectrum remains attractive so that the benefits can be passed down to the customer who may enjoy a robust 5G ecosystem.”

    According to Mittal the CapEx required to expand 4G capacity and upgrade existing capacity to 5G would not be very big. “We are largely done with our 4G capacity and only add extra capacity in high connectivity areas to cater to the surge in traffic. 5G capacities are huge and modular and upgrading to 5G in areas where there is higher traffic will be ideal,” he stated. 

    Sustainability in telco business

    While Airtel is positioned to capture the growth in the next two to three years, Mittal advocated that the economic model of the telecom business in the country needs to change and become viable for sustainable growth. 

    “We expect the government to respond with a lighter touch,” he said, noting that out of Rs 100 in revenues Rs 35 goes to the government in the form of levies.

    He said, “Indians are consuming 16 Gb of data on average per user every month and having an appropriate and decent return on capital is vital to the sustainability of the industry. We don’t see data consumption increasing exponentially from 16 Gb which is already a global record.”

    The company’s ARPUs stands at Rs 146 as reported in the last quarter results and “we need to quickly get it to Rs 200 and Rs 300 eventually,” he said.

    “At Rs 100, customers would be able to be on the network and be able to do a small amount of snacking, whereas at Rs 600-800 customers would be able to enjoy all benefits of data under the sun and it still would be the lowest tariffs in the world!” he said.

    In September 2016, when Reliance Jio was launched, the entire telco industry’s ARPUs dropped below Rs 100. “The industry has reached Rs 150 and soon is expected to cross the Rs 200 mark by the end of the year,” he noted.

    Broadband network expansion

    Regarding the growth of FTTH business, he said “millions of new homes and offices are enabled with FTTH broadband services and we have seen a lot of momentum in the last 12 months. Our last quarter results showed that the number of fixed broadband connections are rising exponentially.”

    The company’s home business segment added ~285,000 new customers during the last quarter to reach a 3.35 million customer base. Other than BSNL, Airtel has been in a rising position when it comes to broadband connectivity. Mittal said that CapEx allocation will be towards backhauling existing capacities and rolling out more fibre.

    Data centre business

    Regarding the data centre business, he said, “We have the right to win in this business as we know how to build data centres and have the domain expertise to run them efficiently. We have a significantly higher chance at success in this space than pureplay real estate players.”

    Nxtra Data Ltd, a wholly-owned subsidiary of Bharti Airtel is engaged in the data centre business and runs 10 large data centres and 120 edge data centres. Nxtra is building multiple large data centres across the country in Pune, Chennai, Mumbai and Kolkata to capture the significant growth opportunities in India. In July 2020, Carlyle announced that it would acquire a 25 per cent stake in Airtel’s data centre business at a valuation of $1.2 billion.

    DTH business

    Speaking about buying back its 20 per cent stake in Bharti Telemedia (D2H business) from Warburg Pincus, he said, “As we get wiser in hindsight, we realised that all our customer-facing businesses need to be in complete control of the mothership company Bharti Airtel. While infrastructure businesses like fibre and tower are different, all our go-to-market businesses need to be aligned as one. That’s why we’ve had tremendous success in the rollout of Airtel Black.”

    Digital business

    “It is difficult for companies from traditional backgrounds, even technology companies like ours to pick up on the digital momentum. It has taken Airtel four to five years to get to a point where we have got the right to call ourselves a digital company,” said Mittal. “In the coming quarters, we will talk a lot more about digital and our revenues coming from digital will also be fairly impressive.”