ITV

Tag: ARPU

  • Reliance Jio Media on track for Phase 1 of cable TV rollout between Jan – Mar 2016

    Reliance Jio Media on track for Phase 1 of cable TV rollout between Jan – Mar 2016

    MUMBAI: Reliance Jio Media, which acquired a pan-India multi system operator (MSO) licence from the Ministry of Information & Broadcasting (MIB) in June this year, is on track for the roll out of its cable television business across digital addressable system (DAS) in Phase 3 areas.

     

    Calling a recent report published as “misleading,” which stated that the company is going to  focus more on 4G and broadband,  as compared to digital television and distribution, a senior Reliance Jio official tells Indiantelevision.com, “MSO business is an integral part of our services and we are as focussed on it as we were from the very beginning.”

     

    Reliance Jio Media has already shortlisted the cities for the first round of MSO rollout. “We will start with 15 cities initially and eventually will reach out to more than 100 cities over the next three years. The first round of launch will take place anytime between January to March 2016,” the official informs.

     

    The MSO will offer both standard definiion (SD) and high definition (HD – incluing Ultra HD)  services to garner high average revenue per user (ARPU). “We will follow a model, which is sustainable in the long run. Having all the viewing experiences for consumers is an important factor and we won’t compromise with that,” added the official.

     

    “Headends, technological partnerships and other infrastructure deals have already been sealed with a few vendors and we will have everything sorted out before 31 December. We are in conversation with several LCOs for both broadband and cable partnerships. Post Diwali we will have the final round of discussion with LCOs for digital cable business,” said the official.

     

    Reliance Jio CEO K Jayaraman leads the company’s MSO business.

     

    A source from the industry opined, “The team that they’ve got in place has the muscle power to deal with any situation. I don’t think there is any lacklustre attitude towards the MSO business from the conglomerate.”

     

    Another senior official from a technological giant, on condition of anonymity said, “We have been working closely with Reliance Jio creating different products for them. We are actively pursuing our partnerships and have no information of a slow down or postponement of launch of distribution of cable TV.”

  • Q2-2016: Airtel DTH YoY subscriber base grows 11%; revenue up 13%; EBIDTA up 53%

    Q2-2016: Airtel DTH YoY subscriber base grows 11%; revenue up 13%; EBIDTA up 53%

    BENGALURU: The direct to home (DTH) industry in India is continuing its bloom, if one were to go by the results reported by Bharti Airtel about its Digital TV services (Airtel DTH) for the quarter ended 30 September, 2015 (Q2-2015, current quarter)

     

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

     

    Airtel’s DTH segment reported 12.9 per cent growth in its revenue for the current quarter at Rs 706.8 crore as compared to the Rs 623.6 crore in Q2-2015. EBIDTA increased 53.2 per cent to Rs 234.3 crore (33.1 per cent margin) as compared to the Rs 152.9 crore (24.4 per cent margin)

     

    The company reported a 10.9 per cent YoY growth in its subscriber base to 105.76 lakh in Q2-2016 as compared to the 95.40 lakh in the corresponding year ago quarter and a 1.6 per cent QoQ growth from 104.12 crore in the immediate trailing quarter. Monthly subscriber churn however increased to 1.3 per cent in the current quarter as compared to 1.1 per cent in Q2-2015 and 0.8 per cent in Q1-2016.

     

    The company reported a slight increase in Average Revenue Per User (ARPU) in Q2-2016 in terms of Indian rupees, but a flat ARPU in terms of the US dollar at $3.5, which means that ARPU in dollar terms declined due to the rise in the price of the dollar in Indian Rupees. ARPU in Q2-2016 increased to Rs 224 as compared to the Rs 220 in Q2-2015 and the Rs 222 in Q1-2016.

     

    Airtel MD and CEO India & South Asia Gopal Vittal said, “Airtel’s revenue growth in India has accelerated to 13.3 per cent in Q2 on an underlying basis, the highest in the last 12 quarters. Our smaller businesses – home broadband, DTH and our business segment all continue to perform strongly. Mobile data revenue has grown by 60 per cent. With the commercial launch of high speed 4G services across 334 towns and roll-out of 3G services in our gap circles, we are now best positioned in the industry to leverage the fast growing data market. On the regulatory front, we welcome the guidelines issued by DOT on spectrum sharing and trading.”

     

    Airtel’s consolidated revenues for Q2-2016 at Rs 23,836 crore grew by 6.6 per cent (4.3 per cent reported Y-o-Y) on an underlying basis, adjusted for India termination rates reduction and Africa tower assets divestment over the corresponding quarter last year. Consolidated mobile data revenues at Rs 3,806 crore grew by 49.8 per cent YoY, uplifted by data traffic growth of 76.3 per cent.

     

    The company says that adjusted for the impact in reduction of termination rates, India revenues growth accelerated to 13.3 per cent YoY (10.3 per cent reported Y-o-Y). On an underlying basis, mobile revenues grew by 12.3 per cent, Airtel business (B2B) by 19 per cent and Digital TV by 22.6 per cent YoY. Mobile data revenue at Rs 2,893 crore registered a growth of 60.3 per cent YoY in India, led by increase in the data customer base by 27.2 per cent and traffic by 69.9 per cent. Data ARPU has moved up by Rs 42 (YoY) to Rs 193 in Q2-2016, led by 35.9 per cent increase in data usage per customer. Mobile Data revenues contribute to 21.5 per cent of Mobile India revenues vis-?-vis 14.5 per cent in the corresponding quarter last year.

     

    According to the company, consolidated EBITDA at Rs 8,265 crore grew by 6.7 per cent YoY with EBITDA margin expanding by 0.8 per cent to 34.7 per cent, driven by India’s margin expansion by 1.6 per cent Y-o-Y. The resultant consolidated EBIT of Rs 4,011 crore represents a YoY growth of 4.1 per cent, impacted by higher spectrum amortisation expense in India post recent auctions.

  • Videocon d2h reports higher EBITDA, revenues, adds 0.2 mn net subs in Q2 FY 2016

    Videocon d2h reports higher EBITDA, revenues, adds 0.2 mn net subs in Q2 FY 2016

    MUMBAI: Indian pay TV platform and DTH operator Videocon d2h is slowly but surely getting its act together. At least if one goes by the financials for the quarter ended 30 September 2015 it has filed with Securities Exchange Commission in the US. The company is listed on the US Nasdaq.

     

    It has announced lower net losses, higher subscription and activation revenues, higher  EBITDA,  and an increase in both gross and net subscribers in the latest quarter as compared to the previous fiscal quarter and Q1 FY 2016.

     

    Net loss for the second quarter of the 2016 fiscal year at Rs 24.6 crore is a 59.9 per cent improvement over the net loss in the second quarter of the 2015 fiscal year which stood at Rs 61.4 core. It is, however,  marginally higher than the Rs 24.6 crore loss it suffered in Q1 FY 2016.

     

     It has reported a sales growth in both subscription and activation revenue and revenue from operations to Rs 629 crore (Rs 505 crore previous fiscal quarter – a growth of 24.6 per cent) and Rs 690 crore (Rs 507.30 crore  in Q2 FY 2016 – a growth of 20.3 per cent growth) respectively.  The comparitive Q1 FY 2016 figures for subscription and activation revenue  and overall revenues for Q1 FY 2016 were Rs 599.61 crore and 662.83 crore.

     

    The company notched up higher net subscribers (10.84 million in Q2 FY 2016 vs 9.46 million in Q2 FY 2015).  Average revenue per user (ARPU) growth  was higher at Rs 205 in Q2 2016 vs Rs 190 in Q2 FY 2015 but stagnated when compared to Rs 205.30 in Q1 FY 2016.

     

    It added 0.20 million net subscribers in this quarter, while adding 0.57 million gross subscribers to end Q2 FY 2016 with 14.27 million gross subscribers.

     

    As a comparitive, the  DTH service provider addded 0.61 million gross subscribers and 0.46 lakh net subscribers in Q1-FY 2016.

     

    Churn was higher in Q2 FY 2016 at 1.19 per cent as against 0.85 per cent in the previous corresponding fiscal quarter. 

     

    The company’s adjusted EBITDA has also improved 32.3 per cent to Rs 191 crore in the quarter ended 30 September 2015 as against Rs 145 crore for Q2 30 September 2014. This is a 2.50 per cent rise in adjusted EBITDA margin to 27.7 per cent in the latest quarter, despite significant increases in content costs as a percentage of revenue. Videocon d2h has clarified that the adjusted EBITDA is calculated after accounting for impact of its ESOP Plan 2014 which amounted to Rs 2.94 crore. The company’s EBIDTA in Q1-2016 was  Rs 187.43 crore (28.3 per cent margin).

     

    Videocon d2h says it began operating under new long term content agreements in the second half of the 2015 fiscal year. Content costs as a percentage of revenue in Q2 FY 2016 stood at 38.1 per as against 34.8 per cent in Q2 FY 2015.  Comparitively, content cost as a percentage of revenue in Q1 FY 2016 was  37 per cent. 

     

    Subscriber acquisition costs in the form of hardware subsidies were Rs 1,775 per subscriber during the second quarter of the 2016 fiscal year as against Rs 1,793 in Q1 FY 2016.

     

    Commenting on the results, Videocon d2h executive chairman Saurabh Dhoot said,  “I am happy to share that we have achieved EBITDA growth of 30.3 per cent in the first half of the current fiscal as against our guidance of 25-30 per cent growth. We are on track to deliver even stronger growth in the second half of this year, in line with the guidance shared earlier. During the quarter, we focused on enhancing our channel offering and added 14 Standard Definition and 4 High Definition channels. We have recently launched two proprietary services, namely d2h Hollywood HD and Darshan. With more than 50 million eye balls we also continue to gain traction on advertising revenue with marque advertisers coming on our platform.”

     

    Speaking on the near term subscriber growth outlook Videocon d2h CEO Anil Khera said,  “We estimate around 50 million television homes come under Phase III digitization, of which 24-25 million television homes are already on the digital platform. Thus, the target market under Phase III digitization is the remaining 25-26 million television homes that are currently on analog cable.”

     

    The company has also stated that its estimated market share stands at 21 per cent and it is among India’s fastest growing pay TV platforms.

     

    The Videocon d2h stock was trading at around $9.49  on Nasdaq at the time of writing as against $12.05 at the beginning of 2015.

     

  • Ground level challenges delay digitsation benefits to MSOs & broadcasters: ICRA

    Ground level challenges delay digitsation benefits to MSOs & broadcasters: ICRA

    BENGALURU: In a vast country like India, ground level challenges is a key reason that has delayed in multi-system operators (MSOs) and broadcasters reaping the benefits of digitisation. The digitisation of the TV distribution industry, initiated in 2011, is yet to achieve its target of addressability and transparency in billing systems, which was expected to yield significant benefits to MSOs and broadcasters as per a report by Indian investment and ratings agency ICRA on the Indian Media and Entertainment Industry – TV Distribution (September 2015).

     

    Some of the noteworthy points mentioned in the report are as follows:

     

    As MSOs struggle with last mile ‘addressability’ hurdles for its digitised customer base, the industry’s ability to deliver customised / value added content remains restricted. As a result, the expected benefits of higher subscription revenues for MSOs and broadcasters are yet to be achieved. The end consumers are also yet to benefit from targeted subscription packages, which were expected to optimise the user experience. ICRA believes that end consumers are also yet to benefit from targeted subscription packages. Roll out of channel packages by MSOs remains crucial for driving ARPU growth and profitability as content costs increase.

     

    Implementation challenges and slow progress in Phase I and Phase II markets have restricted monetisation for MSOs due to slow progress in Consumer Application Form (CAF) collections – effectively LCOs have retained their control over the subscriber base, disputes in sharing of entertainment tax, ARPU is constrained and as yet determined on per subscriber basis, and not on basis of channel packages chosen.

     

    While distributors have witnessed 25-30 per cent decline in carriage income, overall carriage income for distributors has remained buoyant because the disbanding of channels aggregators has given distributors leverage with smaller broadcasters and new channels. Also, new channel launches and wider audience measurement metrics will keep carriage revenues buoyant for MSOs.

     

    DTH players and regional MSOs are likely to take the lead in implementation of Phase III and Phase IV. Extension of deadline for Phase III and Phase IV markets provides adequate time for resolving ground issues as well as coverage for large subscriber base; however lower purchasing power and price sensitive nature of subscribers make investments less attractive. DTH players remain well positioned for tapping growth opportunities in Phase III and Phase IV markets due to inherent technology advantage and easier access to cable dark areas.

     

    Credit profiles unlikely to improve significantly on account of debt funded capex plans.  Longer than expected timelines in monetisation opportunities, higher content costs for digitised areas coupled with ongoing investments for Phase III and IV would keep the return and coverage indicators of MSOs muted in near term. 

     

    While a significant amount of equity funds supported the investments in Phase I and II markets for major MSOs, investments for penetrating Phase III and IV areas, broadband penetration as well as offering value added services (such as Video on Demand) may be largely funded through debt; correspondingly the borrowing levels are expected to remain high over the next two years while the profitability generation from digitised areas stabilise gradually.

     

    In spite of execution delays, in the longer term, digitisation is expected to benefit MSOs, DTH operators and broadcasters through greater customer wallet resulting in higher subscription revenues.

     

    Sizeable subscriber penetration opportunity persists in Phase III and Phase IV markets. The market share dynamics between MSOs and DTH players are expected to change with an uptick in run rate for DTH operators (approximately 20-25 per cent market share in Phase I/II) as the industry progresses towards the Phase III and Phase IV.

  • Videocon d2h eyes 35-40% EBITDA growth at Rs 8.6 billion in FY-2016

    Videocon d2h eyes 35-40% EBITDA growth at Rs 8.6 billion in FY-2016

    MUMBAI: Driven by strong subscriber growth momentum and improving average revenue per user (ARPU), Indian direct-to-home (DTH) company Videocon d2h is expecting EBITDA to be in the range of Rs 8.2 – 8.6 billion in FY-2016, which translates to approximately 35-40 per cent growth over EBITDA in the fiscal year ended 31 March, 2015.

     

    As was earlier reported by Indiantelevision.com, Videocon d2h is also planning to increase its monthly subscription rates in the range of Rs 12 – 23 per month.

     

    The company maintains its current first half of the fiscal year ending 31 March, 2016 guidance of 25-30 per cent period on period growth of EBITDA, and is guiding towards 40-45 per cent period on period growth in the second half of the fiscal year ending 31 March, 2016.

     

    Videocon d2h executive chairman Saurabh Dhoot said, “We are pleased to provide strong EBITDA growth guidance for fiscal year 2016. This is driven by strong subscriber growth momentum, improving ARPU and further benefit of operating leverage. We remain excited about our long term subscriber growth prospects as a result of the government mandated move to digitalisation. We have positioned ourselves to take advantage of the 100 million subscriber homes opportunity for the industry over the next four to five years.”

  • Videocon d2h eyes higher ARPU, ups monthly subscription prices

    Videocon d2h eyes higher ARPU, ups monthly subscription prices

    MUMBAI: In a bid to attain growth in average revenue per user (ARPU), direct-to-home (DTH) operator Videocon d2h has decided to increase its monthly subscription prices pan India.

     

    Depending on the monthly subscription rate of the package, prices will increase in the range of Rs 12 – 23 per month. 

     

    The move comes in the wake of content expansion benefitting consumers as well as numerous technological advancements that the DTH operator has made over a period of time.

     

    Currently Videocon d2h offers various packages in North, East & West India, Delhi City and South India. The packages on offer to subscribers in price range varying from Rs 202 – Rs 613 are as follows: Super Gold Pack, Gold Maxi, New Gold Sports Pack, New Diamond Pack, Platinum Pack, Platinum HD Pack, South Silver, South Silver Maxi, South Silver Sports, New South Gold, South Gold Maxi, New South Gold Sports, New South Diamond Pack, South Platinum Pack and New South Platinum HD.

     

    Videocon d2h offers a robust lineup of channels and services totalling 525 national and regional channels and services across India.

     

  • “We are aiming to get digital users to switch to our OTT platform”: RC Venkateish

    “We are aiming to get digital users to switch to our OTT platform”: RC Venkateish

    At a time when digitization of cable television is throwing up a major challenge to direct-to-home (DTH) operators, Dish TV has reported a 55.2 per cent higher profit after at Rs 54.21 crore in the quarter ended 30 June. It is the first DTH company to report a profit after tax, also adding 390,000 subscribers, which was only slightly lower than the figure of 404,000 in the fourth quarter of 2014-15. Dish TV now has 13.3 million subscribers. The ARPU is more or less the same, but subscriber acquisition costs are running at Rs 1750 per subscriber.

                         

    In an interview with Indiantelevision.com, Dish TV CEO RC Venkateish spoke of the work that had gone into achieving this success.

     

    Excerpts:

     

    To what do you attribute your success in reaching out to more subscribers and coming up with an impressive revenue figure?

     

    I feel that the credit goes to better marketing strategies and the youth-based Zing, which has been lapped up by the people because of the local content. In fact, Zing has also succeeded because there is greater emphasis on the language of the region where it is beamed with local content and programming.

     

    Can you throw some light on the plans to launch Zing in the Kerala market?

     

    Zing has been present in the Bengal, Tamil Nadu, Andhra Pradesh and Maharashtra. And we are now expanding and moving to Kerala with Malayalam content.

     

    Dish TV’s subscription figures are somewhat lower than those in the last quarter of 2014-15. Comment.

     

    Well, the effort is to consolidate and grow. Dish expects to add 1.5 to 1.7 million subscribers this year. Do not overlook the fact that last year we had got 332,000 subscribers in the same period (first quarter of 2014-15). The gradual shift to digitization will also help, and therefore the concentration at present is on Phase III and Phase IV.

     

    But the ARPU shows an increase of only one rupee over the previous quarter, ending up at Rs 173 a month.

     

    The ARPU is always typically low in the first quarter but picks up later.

     

    The Government is emphasizing on indigenous set top boxes. Are you installing local STBs for your subscribers?

     

    Dish is currently getting these mostly from Korea though every effort is being made to get good quality indigenous STBs.

     

    Dish TV also has a tie-up with Kolkata Knight Riders. How much of the budget goes into marketing and advertising?

     

    The players wear Dish TV armbands, and the tie-up gives us the opportunity to have in-stadia advertising through boards etc.

     

    I would not say budget, but around 3.5 per cent of the topline sales go into advertising and marketing. The advertising is not done merely through Zee’s own channels but also through other channels, digital platforms, hoardings, newspapers and FM channels.  

     

    Can you tell us something about your future plans?

     

    We are working on our over-the-top (OTT) platform – DishOnline and aiming to get digital subscribers on to this platform.

     

    There has been some tirade against local channels run by DTH operators. Comment.

     

    We do not have a local channel. But the channel that opens as one switches on Dish is aimed only at advertising various schemes of the platform and modes of payment.

     

  • Q1-2016: Dish TV q-o-q PAT up 55%, adds 390K net subscribers

    Q1-2016: Dish TV q-o-q PAT up 55%, adds 390K net subscribers

    BENGALURU: Last fiscal and quarter (year and quarter ended 31 March, 2015, Q4-2015), the Subhash Chandra led Essel groups DTH operator Dish TV Limited (Dish TV) turned the corner with a consolidated PAT of Rs 3.14 crore and Rs 34.94 crore (margin 4.8 per cent) respectively. 

     

    Dish TV was probably the first among listed DTH companies in the country in FY-2015 and Q4-2015 to report a profit after tax as opposed to the operating profits reported by a segment of the other goliaths for whom DTH services is just another small segment.

     

    This quarter (quarter ended 30 June, 2015, Q1-2016), the company has reported 55.2 per cent higher PAT at Rs 54.21 (margin 7.4 per cent) as compared to the above mentioned PAT in Q4-2015. The company had reported a loss of Rs 14.97 crore in Q1-2015.

     

    Note:  (1)100,00,000 = 100 Lakh = 10 million = 1 crore

     

    (2) With effect from April 1, 2015, Dish TV says that it has started netting-off certain collection fees paid to its trade partners from its topline. This has resulted in the company’s topline getting shrunk by around 4 percent, with a similar number being decreased from the middle line. The values for the prior comparative periods have also been recast to reflect the same.

     

    (3) Dish TV recently transferred its non-core business (including set-top boxes, dish antenna and related services) to its wholly owned subsidiary Dish Infra Services Private Limited (formerly known as Xingmedia Distribution Private Limited) on April 1, 2015 on a going concern basis. The Company today reported its maiden consolidated quarterly numbers.

     

    The company reported addition of 3,90,000 net subscribers in Q1-2016, taking its total subscriber base to 1.33 crore as on 30 June, 2015. Post consolidation, Dish TV says that Average Revenue Per User (ARPU) was Rs 173 versus Rs 172 (q-o-q) in Q4-2015. ARPU however would have been Rs 180, as compared to Rs 179 in Q4-2015, without the effect of consolidation. The company reported consolidated subscription revenues at Rs. 628.88 crore, up 20.6 percent y-o-y.

     

    The company reported 0.9 per cent higher consolidated net total Income from Operations (TIO) in the current quarter at Rs 736.68 crore as compared to the Rs 729.93 crore in the immediate trailing quarter and was 19.2 per cent more than the Rs 618.04 crore in Q1-2015.

     

    Dish TV chairman Subhash Chandra said, “Dish TV has been actively contributing to the ‘Digital India’ movement by digitizing analog TV homes in DAS phase 3 and 4 markets and remains optimistic about its prospects to acquire a substantial share in these markets. Continuing its focus on growth with profitability, the company delivered another quarter of encouraging financial results.”

     

    Let us look at the other numbers reported by Dish TV

     

    Dish TV total expenditure in Q1-2016 at Rs 659.69 crore (89.5 per cent of TIO) was 0.7 percent lower than the Rs 664.08 crore (91 per cent of TIO) in Q4-2015 and was 8.7 per cent more than the Rs 606.80 crore (98.2 per cent of TIO) in Q1-2015.

     

    A major expense head is programming /content and other costs (content costs). In Q1-2016 content cost at Rs 212.01 crore (28.8 per cent of TIO) was 2.1 per cent more than the Rs 207.62 crore (28.4 per cent of TIO) and was 5.3 per cent more than the Rs 201.39 crore (32.6 per cent of TIO) in Q1-2015.

     

    Employee Benefit Expense (EBE) in Q1-2016 at Rs 34.67 crore (4.7 per cent of TIO) was 39.7 per cent more than the Rs 24.81 crore (3.4 per cent of TIO) an was 34.8 per cent more than the Rs 25.72 crore (4.2 per cent of TIO) in the corresponding year ago quarter.

     

    Dish TV managing director Jawahar Goel said, “Our first quarter results are in line with the success of our regional and high definition (HD) strategy. Our regional offering, Zing, would soon be launched in Kerala and would carry the largest cache of vernacular channels offered in that market. 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. High definition continues to be a value driver and a key differentiator for us compared to other DTH offerings in India. Dish TV’s industry leading bandwidth capacity supports 42 HD channels, the largest on offer by any distribution platform so far.”

     

    “Led by robust subscriber additions and an improving ARPU, subscription revenues for the quarter increased 20.6 per cent over the corresponding quarter last fiscal. EBITDA of Rs 2,368 million recorded a significant 51.3 per cent jump over the corresponding quarter. Net Profit for the quarter was Rs 54.2 crore compared to a loss of Rs 15 crore in the first quarter last fiscal. The resultant free cash flow was Rs 68.9 crore. Amid improving financial performance, churn for the quarter remained steady at 0.7 per cent per month,” added Goel.

  • Despite roadblocks, India attains 48% digital pay-TV penetration in 8 years: MPA

    Despite roadblocks, India attains 48% digital pay-TV penetration in 8 years: MPA

    MUMBAI: Following a blitzkrieg of cable set-top box (STB) deployment, the digitisation process is taking a breather as operators shift focus from deployment to monetisation in order to ensure growth with profitability. 

     

    As per a recent Media Partners Asia (MPA) report, the pace of India’s pay-TV growth story may appear to be in trouble. However, the report also points out that the process of profitable digitisation typically takes 15-20 years. “In this context, for a market characterised by low average revenue per user (ARPUs), absence of tiering and fragmented last mile cable distribution, India has done well to attain 48 per cent digital pay-TV penetration in eight years,” the report highlights. 

     

    As the industry consolidates and regroups, the current phase of India’s pay-TV industry offers significant opportunities for value creation across various business segments. The key opportunities and levers, according to MPA are as follows:

     

    Cable

     

    Initial STB seeding by cable operators has improved subscriber declarations. Accordingly, with the transition from analog to digital, net ARPUs to multi system operators (MSOs) have grown 10x, to Rs 100 per subscriber per month. However, the current balance sheet position of most MSOs does not justify market expansion. MSOs are therefore compelled to drive operational efficiencies through prepaid services and packages. This helps improve yields from existing digital subscribers. Operators successful in executing such moves will attract refinancing (of existing debt) to expand their consumer offerings with bundled broadband and HD services. Over time, MSOs will also gain more operational control of their networks through majority ownership of joint ventures, and eventually acquire primary points at affordable prices.

     

    At each stage of cable’s evolution, the operating margin for MSOs will grow multifold. The business will remain capital-intensive but as operators grow to become full-service providers, they hold the potential to generate significant returns on capital employed (RoCE). Cable assets should not just be evaluated on reach and the digital subs base but also on their ability to cross-sell high value services such as HD and broadband. Also important is their effective economic interest in the last mile business. As the approach for MSOs shifts from width to depth, structurally, cable platforms will remain concentrated in the top 50 cities. This could change dramatically, however, with the entry of deep-pocketed players such as Reliance Jio and the growth of Headend-in-the-Sky (HITS) platforms, which seek to digitise rural markets.

     

    Several international and long-term financial strategics have also been eyeing partnerships with India’s cable and broadband players. This would help expedite capital as well as technical, operational expertise.

     

    DTH

     

    Since its inception, the DTH sector has made cumulative investments of Rs 275 billion and has been primarily responsible for driving penetration of digital pay-TV. With a base of more than 41 million active subscribers, DTH is poised to benefit from greater economies of scale. In 2014, the DTH industry reported an average EBITDA of Rs 38 per sub per month, with margins at 16 per cent. Moreover, two of the leading operators, Dish TV and Airtel Digital, have already started generating positive free cash flow (FCF). 

     

    Over time, MPA expects the DTH industry at large to generate meaningful FCF through: 

     

    (1) EBITDA margin expansion, as operating leverage starts to play out with subscriber acquisitions in Phase III and Phase IV DAS markets; and 

     

    (2) The composition of incremental revenue becoming driven more by ARPU growth rather than subscriber volumes. Leading players will be able to self finance future growth as well as consolidate the market, creating significant value in the process.

     

    Broadcasting

     

    India’s $3.5 billion broadcast industry remains in a sweet spot. The dual revenue stream of advertising and subscription is expected to benefit from a resurgent economy as well as improved structural dynamics anchored to steady growth in the number of TV households (TVHH) and higher digital pay-TV penetration.

     

    At 60 per cent TVHH penetration, India continues to add seven million new TV homes each year. In other words, at an average family size of 4.5 members, TV is gaining more than 30 million potential viewers each year. Television will continue to offer the highest reach to advertisers, relative to other media. As a result, advertisements will remain the major revenue stream for broadcasters, while an increase in affiliate sales will help stabilise the business and drive profitability.

     

    As of end-2014, total affiliate sales for broadcasters reached $1.1 billion, according to MPA. Significantly, 80 per cent of affiliate revenues were derived from digital subscribers (cable DAS + DTH), while India’s digital pay-TV penetration stood at 48 per cent for the same period. Digitisation has therefore improved subscription yields for broadcasters.

     

    In 2014, an average broadcaster’s yield from digital subscribers stood at Rs 74 per sub per month, against Rs 18 per sub per month from analog. There is therefore upside on affiliate sales, as analog subscribers in Phases III and IV convert to digital.

     

    Besides leading to greater addressability, digitisation has also improved channel distribution economics by lowering the cost of distribution and allowing multiple modes on content delivery (SD, HD SVoD, TVE etc). Although cable continues to account for more than 80 per cent of the carriage and placement (C&P) market in India, since the roll-out of DAS in 2012, the cable net distribution income (or NDI, which is essentially subscription income minus C&P costs) for broadcasters has grown by 137 per cent, to $218 million. 

     

    Going forward, the growth of the broadcasting industry will be driven by:

     

    (1) Expansion in advertising through sub-segmentation and identifying new genres

     

    (2) An increase in the addressable subscriber base with more digital homes

     

    (3) Growth in subscription yields: MPA projects total pay-TV channel revenues for broadcasters to grow from $3.5 billion in 2014 to $6.1 billion by 2019, and to $7.9 billion by 2023.

     

    Based on the relative growth for other markets in Asia- Pacific (ex-China), India is expected to contribute more than one-third of the total channel revenue business in the region by 2023. India’s strategic importance in the region cannot be ignored. For major international networks,

    India already contributes a significant part of their overall APAC business.

     

    Broadband to sow seeds for new digital assets

     

    Significant investments are also being made in India’s fixed and wireless broadband infrastructure. This will help boost internet penetration and improve average broadband download speeds. To address the challenge of last mile connectivity, the Department of Telecom (DoT) is considering joining forces with cable MSOs and local cable operators to help boost broadband penetration in smaller cities and towns. The above proposal, if implemented, can open new avenues for cable broadband.

     

    MSOs have already increased their investments in broadband. As of end-2014, cable broadband subscribers stood at one million, or only 0.3 per cent penetration of total households in the country. However, the entry of new players such as Reliance Jio could dramatically change the fixed broadband landscape. Having recently secured a pan-India MSO license, the company claims to have built the capacity to serve 20 million fiber-to-the-home (FTTH) customers.

     

    Traditional broadcasters are looking to capitalise on the emerging digital opportunity by investing to create long-term assets. For instance, incumbent broadcasters Zee, Star and Sony have started to aggressively invest in delivering branded OTT services. The belief is that online video consumption will complement the existing linear pay-TV business. Eventually, subscription OTT services will take off as bandwidth costs become more affordable and compelling exclusive content is made available for online audiences. Nonetheless, revenue monetisation will require more scalability, as online video revenues are projected to account for not more than 10 per cent of total video industry revenues over the next decade.

  • Siti Cable and Dish TV join hands to form ‘Comnet’

    Siti Cable and Dish TV join hands to form ‘Comnet’

    MUMBAI: Dr Subhash Chandra led Essel Group believes in innovation and how. The two companies from the group, multi system operator (MSO) Siti Cable Network and direct to home (DTH) player Dish TV have formed a joint venture (JV) to deal with the ever growing content cost. Christened ‘Comnet’, the JV will help synergise the strengths of both the organisations in dealing with broadcasters.

     

    Essel Group has synergies in broadcast, cable, DTH and over the top (OTT) services. “When we look at either of these platforms, the key to its existence is content. The cost of content today is increasing rapidly and at a pace with which even the connections in the market aren’t growing,” tells Siti Cable CEO VD Wadhwa to indiantelevision.com.

     

    According to Wadhwa, while the consumer average revenue per user (ARPU) levels is increasing in single digits, broadcasters, who sign one-year deals with distribution platforms, expect the revenues grow anywhere between 20-60 per cent. “This is impractical, unsustainable and is no way any business model will evolve or work,” he adds.  

     

    The reason both Dish TV and Siti Cable have come together is to be able to make the best use of each other’s advantages and disadvantages. While DTH doesn’t enjoy as much carriage as cable gets, when it comes to content deals, DTH platforms have an upper hand. “While my input cost, which is the content cost is growing at a fast pace, I am not being able to drive the market price. If consumer ARPUs remain low, we can’t allow the content cost to go up. Also considering both the platforms target the same set of consumers in the market, it made more sense for us to join hands to deal with broadcasters,” informs Wadhwa.

     

    Dish TV CEO RC Venkateish says, “This move will help both the entities to provide quality content at affordable price to consumers.”

     

    Both, the DTH and cable platform currently is unable to pass on the increased input cost to the customer. “And then there are the additional taxes. The Delhi government recently increased the entertainment tax from Rs 20 to Rs 40, not realizing that it is a price sensitive market. Neither the consumer nor the broadcaster is ready to take the burden of the increasing cost. In order to protect our business model and remain a consumer friendly company and comply with all the rules and regulations, we thought of coming together,” he says.  

     

    The JV will help the duo in not just controlling deals with broadcasters, but also in sourcing equipments. “Both Dish TV and Siti Cable need set top boxes. There are a lot of synergies if we work together,” he adds.

     

    Between Siti Cable and Dish TV, the two currently have more than 2 crore subscribers, which in the next two years, according to Wadhwa will go up to 4 crore. “If we are currently present in 2 crore households, we are talking of almost 9-10 per cent of India’s population. This gives us a lot of leverage,” he says.

     

    According to Wadhwa, while the broadcasters have already come together to work for the advantage of the broadcasting sector, the distribution platforms too need to work in a synergy. “While that is currently not possible, at least the two companies in the group should start working together immediately,” he opines.

     

    As part of the JV, the duo will hold joint discussions with broadcasters, taking joint call on the deals. “If the broadcaster wants to arm twist Siti Cable, it has to be careful that Dish TV may also react or vice versa,” he informs.  

     

    Starting 1 July, 2015, it is ‘Comnet’ that will do the negotiations with broadcasters for both the platforms together. Post that, a direct contract between the broadcaster and the distribution platform will be signed. “The benefit will be shared between Dish TV and Siti Cable,” concludes Wadhwa.