ITV

Tag: CableTV

  • NXT Digital does a financial turnaround in FY 2020

    NXT Digital does a financial turnaround in FY 2020

    MUMBAI: Among the early movers in the cable TV industry, the Hinduja group run – NXT Digital has turned out impressive financials for the financial year 2020. The topline has shown significant growth, it has turned EBIDTA positive and how; the red ink on its bottomline has been replaced by fat profits and to top it all it has even declared a dividend of 50 per cent. And it's all thanks to its subsidiary IMCL, which has declared a robust performance over the past four quarters. 

    On a consolidated basis, revenues grew by 65 per cent over FY19, from Rs 704.62crore to Rs 1,162.10crore; operating EBIDTA rose significantly to Rs 218.01crore against a loss of Rs 72.61crore; its PAT is a healthy Rs 110.05 crore as against a loss of Rs 303.43 crore in FY19. Buoyed by the great showing, a dividend of 50 per cent has been declared to the joys of many a shareholder. 

    NXT Digital announced that its HITS platform today has five million subscribers through local cable operators (LCOs) and smaller multisystem operators (MSOs) in 1500 towns all over India, and even in remote places such as Ladkah, Kargul, the far north east and the Andaman, Nicobar and Lakshwadeep islands. The technology, using C-band is not affected by rain or adverse weather and customers in these areas continue to enjoy digital services, uninterrupted. 

    "This kind of outstanding performance consistently over the last four quarters speaks volumes on our commitment towards our subscribers through strong value creation," says IMCL CEO Vynsley Fernandes."We firmly stand committed to further our endeavor of creating an integrated platform for digital services, offering cable TV, satellite, broadband and other digital media, all under one roof. Building an effective framework along with our product bundling strategy has been crucial for our business turnaround in FY20. With close to a 100 per cent prepaid base and a substantial presence in phase 3 and 4 markets, IMCL expects to continue on its digital growth path."

     The company says it has continued to focus on key drivers through FY' 20. Some of these include: 

    * Targeting the the fastest growing segments of semi-urban and rural India. Over 60 per cent of its subscriber base is in these markets which continue to see increasing pay TV penetration as well as growing average revenue per user (ARPU).

     *Growing ARPU through value added services and differentiated products in the cities. Launching innovative products like layering cable TV with broadband and value-added services, coupled with 24X7 services on ground.

     * Successfully implementing the new regulatory framework, set out by the TRAI (Telecom Regulatory Authority of India) in early 2019. The visionary framework which brought in much needed transparency to the pay TV ecosystem and enhanced subscriber choice has buoyed the business model and set out a clearly defined level playing field for the industry. 

    * Maintaining pre-paid collections at nearly 100 per cent, whilst ensuring low churn through a focused E&R (engagement &retention) model for subscribers and franchisees. 

    * Leveraging its leadership position in technology, whilst improving cost efficiencies. Recently moved to 32APSK technology, that improves satellite throughput by over 30 per cent. 

    * Working closely with its 9,000 plus franchisees to remain focused on the subscriber through continuous enhancement of the quality of service and viewership experience. 

     This apart, the company is working on developing an indigenous set top box keeping in mind the government's Make in India mandate; it has been conducting digital online training for its LCOs; it has built a robust digital payment collection platform, and even rolled out a proactive business continuity plan to ensure that its subscribers get top class service even during cyclone and the ongoing Covid2019 pandemic that has rocked India and the world. 

    Going forward, it plans to expand on its managed services model and has signed on additional MSOs; that should double its subscriber base to 10 million. The company says the model effectively supports these smaller MSOs and LCOs several of whom are unable to sustain their businesses due to increasing costs of connectivity and technology obsolescence. 

    Fernandes adds that the idea is to expand the services its franchisees can offer, making them multi-product and multi- service providers; offering customers a whole range of services from FMCG products to digital and financial solutions. 

    "This will help our franchisees not only sustain their businesses, but diversify and grow their earnings portfolio, across the country," he says. "We remain focused on delivering integrated services to customers, bundling television with broadband services from our ISP subsidiary OneOTT iNTERTAINMENT, which has a presence in over 40 cities."

  • Will foreigners buy into easing of FDI in cable TV, DTH?

    Will foreigners buy into easing of FDI in cable TV, DTH?

    MUMBAI: The government has earlier this week announced the lifting of Foreign Direct Investment (FDI) barriers for 15 sectors as a Diwali bonus to industry.

     

    Hereon, the limit for uplinking of news and current affairs for television channels has been increased from 26 per cent to 49 per cent. Foreign majors wanting to look at a long term play in the broadcast distribution space can now pump in 100 per cent in cable TV networks (multi-system operators and local cable operators), DTH, teleport, headend-in-the-sky (HITS) and mobile TV ventures as against the 74 per cent earlier Distribution platforms can raise as much as 49 per cent FDI through the automatic route. If companies want to go beyond that, they will need government approval. The radio sector has got some welcome breathing space in that investment limits have been hoicked to 49 per cent from 26 per cent earlier.

     

    What does this all mean for the television ecosystem? Will there be a flood of money flowing into cable TV, DTH, teleport, HITS and mobile TV ventures from overseas? Will news channels attract foreign investment by the sackful?

     

    We, at indiantelevision.com, believe that none of this likely to happen in a hurry in all the segments that have been prised open.

     

    Distribution is a tough play in India as history has shown. It is relatively unorganized, with low ARPUs, it lacks transparency, is small in scale, and is short on capital, which makes it an unappealing asset to invest in. Digitisation of cable TV has led to some improvement, but it is still a halfway house. The lack of last mile customer ownership, paucity of subscriber information, lack of two way addressability, and business norms and ethics make it a relatively high risk investment.

     

    Things may change if Reliance Jio makes inroads into cable TV and brings some order into it. However, its management may well discover that distribution is like a slippery soap in a shower, that  it is more complicated than distributing electricity or exploring and drilling for oil.
     

     

    It is the MSOs’ broadband businesses that are a lot more transparent,  that have in any case been spun off into separate companies keeping in mind government regulations and restrictions.  And this is what may catch the interest of investors.

     
    In the nineties, Rupert Murdoch partnered with Subhash Chandra in Siticable – only to exit a little later with his knuckles bruised. A few years later he once again took a shot at it when Star India invested in the Rajan Raheja promoted Hathway Cable & Datacom. Once again, he had to exit yelping in pain. Since then, Star has been extremely averse to investing in cable TV.

     Most of the major distribution ventures are listed: Siticable, Hathway Cable & Datacom, Ortel, Hinduja, Den Cable, SunTV, DishTV, Airtel, Reliance Big (the management is currently getting it delisted),  and some even have attracted private equity investments. But the stock market has not really bought into pure play distribution initiatives and the shares have been depressed as compared to the prices they could command. The PEs which have parked funds in them are still waiting for a nice fat return on their investments.

     Where FDI has worked is in the DTH space and the sole exception is DTH operator Tata Sky in which Twenty First Century Corp holds a 30 per cent stake.  Then there is Videocon d2h, which is listed on Nasdaq, following to the support of its lead investment partner Harry Sloan of Silver Eagle. The Essel group owned Dish TV has got the thumbs up from the market and has got a buy recommendation from many research firms.

     
     
    DTH operators, unlike their cousins on the ground, are more organized, professional, have transparency of operations and have recently started getting some payback from their upfront and cumulative investments over the past decade or so building scale in their customer base.

     
    Hence, it is quite possible that Dish TV, Airtel, Videocon, and Tata Sky might see some activity following the loosening of FDI.  But even prior to the announcement, not many investor suitors had lined up looking to partner with them.

    At the time of writing this report, the stock markets had reacted positively to the news about the easing of FDI in media, and had pushed up the share prices of Dish, Siticable, DEN Networks by 10 per cent plus before Diwali.

     Sun TV, has so far been happy being a lone player with a stranglehold on its markets, and has desisted from partnerships with local players. One does not know if promoters Kalanithi and Kaveri Maran will change their thinking now.

     As far as news is concerned, major news organisations worldwide have enough on their hands. They are grappling with the changing paradigm of news gathering and dissemination, courtesy the explosion in social media and their live streaming apps which threaten to make individuals  – whether journalists or online stars – with huge followings, a rival to large news networks. For the new millennials, online is the preferred source of news, which they consume on their twitter or facebook timelines.

     India has a surfeit of news channels or ‘views channels’; many of them are run for purposes of influence, and not as commercial initiatives. For the relatively more professional ones, the key question is whether foreign investors – especially those in the news business would be happy with a less- than majority equity position in a news television channel. For that to appear attractive they will look for dividends or a northward movement in the stock price.
     

     
    News organizations normally are obsessive about keeping control over the content on a news channel. But you there have had been licensing deals – like in the case of CNN-IBN.  Others have come in on their own, after getting downlinking and uplinking clearances.

     

    It’s not as if news television in India is a very scalable business opportunity.  At least, so far. The largest news network does revenues of around Rs 500 crore.  This could go up to Rs 1000 crore with the expansion in regional news and distribution internationally. The limited scalability despite, amongst the news players some of whom look alluring figure: NDTV, Times Now, Zee Media, TV9, TV Today, ITV group, and  India TV. Of course some smaller players like BAG Films E24 group might attract FDI.

     

     What should come as a relief is the allowing of 100 per cent FDI through the automatic route in non-news and current affairs channels. Many new channels and broadcast networks which are looking  to expand their global footprint to include the Indian audience may now do so, either through mass and/or niche channels. Full ownership means they can control their destinies in India.
     
    Now that the government has opened its house on FDI in media, it would do well by making the procedures simpler and faster. TV broadcast players managements have to perforce get ministry of home affairs, ministry of information and broadcasting’s  and RBI’s clearances. The  bureaucrats,  directors and officers in these bodies need to be trained to reflect the Modi government’s approach in being industry enabling, rather than being obstructionist. Maybe a single window clearance approach could help. Otherwise, even this FDI liberalization may end up being another well-intended-but-misplaced initiative.