ITV

Tag: Ebitda

  • Q3-2016: Videocon d2h YoY revenue up 22% on subscriber additions, higher ARPU

    Q3-2016: Videocon d2h YoY revenue up 22% on subscriber additions, higher ARPU

    BENGALURU: Videocon d2h Limited reported 14.8 per cent YoY increase in net subscriber additions and 8.2 per cent YoY growth in ARPU for the quarter ended 31 December, 2015 (Q3-2016, current quarter). The company’s revenue from operations (TIO) increased 21.6 per cent YoY to Rs 731.49 crore in Q3-2016 as compared to Rs 601.53 crore. Subscriber addition brings in higher activation revenue.

     

    The company achieved strong subscription and activation YoY revenue growth of 26 per cent at Rs 665 crore as compared to Rs 527.9 crore in the corresponding year ago quarter.

     

    Videocon d2h added 6.7 lakh gross subscribers and 4.3 lakh net subscribers during the quarter. Gross subscribers totalled 149.5 lakh and net subscribers totalled 112.7 lakh as of 31 December, 2015. The company says that monthly churn came in at 0.73 per cent for the quarter and 0.80 per cent for the nine months ending 31 December, 2015, which was marginally ahead of the company guidance.

     

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

     

    Average revenue per user (ARPU) in Q3-2016 increased 8.2 per cent to Rs 211 as compared to Rs 195 in Q3-2015 and increased 2.9 per cent as compared to Rs 205 in Q2-2016.

     

    Videocon d2h reported 42.2 per cent YoY growth in adjusted EBITDA at Rs 201 crore for Q3- 2016 compared to Rs 141 crore in the corresponding year ago quarter. Net loss for the quarter declined to Rs 22.05 crore as compared to the net loss of Rs 79.8 crore in Q3-2015.

     

    Videocon d2h executive chairman Saurabh Dhoot said, “I am delighted the company reported EBITDA growth of over 42 per cent in the quarter compared to last year. This is a result of strong subscriber and ARPU growth and our continued focus on margin improvement, in line with our expectations. We believe we are amongst the fastest growing media companies in the world delivering exceptional performance quarter after quarter. During the quarter, we continued to strengthen our content offering and added new channels on our platform. We recently added two transponders ahead of schedule. This further strengthens our content offering, which is one of our key competitive advantages. With this additional bandwidth we will continue to add more regional and HD channels to our platform in times to come.”

     

    Speaking on the Phase III digitisation implementation, Videocon d2h CEO Anil Khera said, “Phase III digitisation has begun. The Ministry of Information & Broadcasting maintained their deadline and instructed broadcasters to switch off analogue signals in Phase III digitisation areas. In the first few days of January 2016, we saw strong pick up in subscriber additions in cities that come under Phase III digitisation. Recently, a few state high courts issued a stay order on implementation of Phase III digitisation for one – three months. This was in line with our expectations of the digitisation being a staggered process.”

     

    “We estimate around 50 million television homes come under Phase III digitisation, of which 24-25 million television homes are already on the digital platform. Thus, the target market under Phase III digitisation is the remaining 25-26 million television homes that are currently on analog cable,” he added.

  • Q3-2016: Videocon d2h YoY revenue up 22% on subscriber additions, higher ARPU

    Q3-2016: Videocon d2h YoY revenue up 22% on subscriber additions, higher ARPU

    BENGALURU: Videocon d2h Limited reported 14.8 per cent YoY increase in net subscriber additions and 8.2 per cent YoY growth in ARPU for the quarter ended 31 December, 2015 (Q3-2016, current quarter). The company’s revenue from operations (TIO) increased 21.6 per cent YoY to Rs 731.49 crore in Q3-2016 as compared to Rs 601.53 crore. Subscriber addition brings in higher activation revenue.

     

    The company achieved strong subscription and activation YoY revenue growth of 26 per cent at Rs 665 crore as compared to Rs 527.9 crore in the corresponding year ago quarter.

     

    Videocon d2h added 6.7 lakh gross subscribers and 4.3 lakh net subscribers during the quarter. Gross subscribers totalled 149.5 lakh and net subscribers totalled 112.7 lakh as of 31 December, 2015. The company says that monthly churn came in at 0.73 per cent for the quarter and 0.80 per cent for the nine months ending 31 December, 2015, which was marginally ahead of the company guidance.

     

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

     

    Average revenue per user (ARPU) in Q3-2016 increased 8.2 per cent to Rs 211 as compared to Rs 195 in Q3-2015 and increased 2.9 per cent as compared to Rs 205 in Q2-2016.

     

    Videocon d2h reported 42.2 per cent YoY growth in adjusted EBITDA at Rs 201 crore for Q3- 2016 compared to Rs 141 crore in the corresponding year ago quarter. Net loss for the quarter declined to Rs 22.05 crore as compared to the net loss of Rs 79.8 crore in Q3-2015.

     

    Videocon d2h executive chairman Saurabh Dhoot said, “I am delighted the company reported EBITDA growth of over 42 per cent in the quarter compared to last year. This is a result of strong subscriber and ARPU growth and our continued focus on margin improvement, in line with our expectations. We believe we are amongst the fastest growing media companies in the world delivering exceptional performance quarter after quarter. During the quarter, we continued to strengthen our content offering and added new channels on our platform. We recently added two transponders ahead of schedule. This further strengthens our content offering, which is one of our key competitive advantages. With this additional bandwidth we will continue to add more regional and HD channels to our platform in times to come.”

     

    Speaking on the Phase III digitisation implementation, Videocon d2h CEO Anil Khera said, “Phase III digitisation has begun. The Ministry of Information & Broadcasting maintained their deadline and instructed broadcasters to switch off analogue signals in Phase III digitisation areas. In the first few days of January 2016, we saw strong pick up in subscriber additions in cities that come under Phase III digitisation. Recently, a few state high courts issued a stay order on implementation of Phase III digitisation for one – three months. This was in line with our expectations of the digitisation being a staggered process.”

     

    “We estimate around 50 million television homes come under Phase III digitisation, of which 24-25 million television homes are already on the digital platform. Thus, the target market under Phase III digitisation is the remaining 25-26 million television homes that are currently on analog cable,” he added.

  • Ronnie Screwvala’s Arré acquires video streaming venture Apalya

    Ronnie Screwvala’s Arré acquires video streaming venture Apalya

    MUMBAI: In a bid to strengthen its video play capabilities, Ronnie Screwvala’s digital media brand Arré has acquired a 100 per cent stake in Apalya Technologies, founded by Vamshi Reddy and Shiva Bayyapunedi.

     

    Reddy, who heads the company as CEO and Bayyapunedi, who is the chief technology officer, will join the founding team of Arré with immediate effect.

     

    With this acquisition, Arré aims to be the country’s leading digital content and platform brand, combining its multi-genre, multi-format content plans with a formidable technology platform.

     

    Apalya is a technology company with a proprietary video platform, strong engineering talent as well as content access relationships with telecom operators. This transaction will be effected via a 100 per cent buy out of shares from all investors including IDG, Kalaari, Cisco, Mumbai Angels and the founders among others.

     

    Apalya runs the OTT platform in partnership with more than 10 mobile operators across four countries, reaching 10 million subscribers annually and currently earning Rs 40 crore in revenue with positive EBITDA margins.

     

    With the telecom ecosystem and service offerings in India undergoing a rapid change with the 4G rollout coupled with the rapidly growing appetite for video, Apalya is rightly positioned to leverage this opportunity.

     

    The company has also made in-roads in various international markets and plans to expand and launch services in the Middle East/Africa and some parts of South-east Asia over the next six months.

     

    Screwvala said, “The OTT space is throwing up massive opportunities that brings together the twin forces of scale and creativity. We’ve already seen this space take off in the US and in other mature markets and we will partner with many and work closely with some on co-creating the next level of digital content. We are a digital-first and digital-only company and our focus is and will remain creating original content in all forms and these will differentiate us and yet allow us to be complimentary to many of our peers.”

     

    Arré co-founder and MD B Saikumar added, “This acquisition gives us wings to move rapidly from being a content player to a ‘content & platform’ player. We aim to operate at the intersection of creativity and technology and the Apalya acquisition is a key move in that direction. Besides, content will need tremendous distribution focus and Apalya’s telecom relationships will add power to our pursuit of reach and access. Digital advertising and Digital payments are seeing seismic growth shifts and Arré will be well positioned to exploit these twin revenue lines for its content offerings.”

     

    Reddy said, “Arré and its founders represents the next wave of digital innovation and disruption in Asia and with all our expertise of the past decade we are happy to join in on this vision and work together to create a true blue digital content and platform company, a strong consumer base and at scale.”

  • Q2-2016: Indian Cable TV companies report improved numbers, but only just

    Q2-2016: Indian Cable TV companies report improved numbers, but only just

    Indian Cable TV is a long haul work in progress is what we had said a couple of quarters ago and mentioned this in the last quarter also. The results of the same four sample companies in the quarter ended September 30, 2015 (Q2-2016, current quarter) in those reports once again endorse this fact. Albeit, all the four companies – the big three– Hathway Cable and Datacom Limited (Hathway), Den Networks Ltd (Den Networks), Siti Cable Network Limited (Siti Cable) and the minnow – Ortel Communication Limited (Ortel) reported a quarter on quarter (QoQ) increase in Total Income from Operations (TIO) in the current quarter, Year on year (YoY ),  TIO of three of the four companies increased, while TIO of Den fell. As expected, broadband subscriber numbers and revenues continue to grow.

    Operating margins (EBIDTA) of three of the four companies grew QoQ, and of two, EBIDTA grew YoY also. Overall the combined EBIDTA of the four companies grew QoQ, but declined by more than a third on a YoY basis. However, the results reported by the four companies show a faint glimmer at the end of the tunnel. How they perform over the next few quarters will tell if the Cable TV fairy tale is going to be real, or remain just a fable. In this paper, there can be no comparison of profit after tax, because, of the four, only one has posted profit after tax quite consistently-Ortel.

    Subscription revenues of all the four companies increased both YoY and QoQ. All the four companies reported increase in digitisation percentages. Carriage Fees show a declining trend in general. The combined Carriage Fees of the four companies was flat YoY but declined QoQ.

    The minnow wants rapid growth, and grow it should, because, as mentioned above, it is the only company among the four that has posted profit after tax. One of the avenues for growth that Ortel is looking at is LCO buyout. Ortel’s President and CEO Bibhu Prasad Rath said, “We are witnessing encouraging traction to our LCO buyout strategy in emerging markets like Andhra Pradesh and Chhattisgarh, and I am confident that this would sustain going forward. Also, going forward, we would continue with our strategy of aggressive LCO buyouts across all our markets and diligently integrate the new subscribers into Ortel’s last mile network.”

    Internet subscription revenue in the current quarter increased YoY and QoQ by more than double digits. All the four companies are focusing on broadband internet services, if one were to go by the comments of their senior personnel.

    “We are looking to further streamline our Broadband operations to provide stellar customer experience. Our commitment to digitization of Phase 3 areas remains and we expect this to gain further momentum in the coming quarter,” said Siti Cable Executive Director and CEO V D Wadhwa.

    Ortel’s  Rath said, “Healthy contribution from new RGUs (revenue generating units) along with ongoing focus on the high margin broadband business would enable us to deliver strong financial performance in the forthcoming years.”

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

    (2) Some figures are approximate.

    (3) Other income has not been factored in for EBIDTA in the report.

    (4) Siti Cable and Ortel numbers for Q3-2015 are estimates.

    (5) This paper is more skewed towards the financial performance parameters in a limited way, rather than the operational and operational performance parameters of the sample companies.

    Total Income from Operations grew both YoY and QoQ

    A major contributor to all the four companies revenues are revenues from their Cable TV Operations. All the four also offer internet services, and revenue from these services add to their revenues. Companies such as Den and Ortel have other revenue streams also. Total Income from Operations or TIO in this paper, is the sum total of all operating income generated by the company including ‘Other Operating Revenue’ such as revenue earned through advertisement,  activation and service charges, etc. TIO does not include other income such as interest, revenue earned through investments, etc. Den owns a football team and that is one of the revenue streams for its TIO, while Ortel is into infrastructure leasing that contributes to its TIO.

    Please refer to Fig 1 below for TIO for six quarters starting Q1-2015 until the current quarter Q2-2016. The combined TIO of all the four companies increased 1.7 percent (increased by Rs 14.10 crore) YoY to Rs 825.32 crore as compared to Rs 811.22 crore and increased 3.3 percent (increased 26.62 crore) QoQ as compared to Rs 798.70 crore. Ortel had the highest YoY and QoQ growth in percentage terms at 24.6 percent (Rs 9.04 crore) and 12.8 percent (Rs 5.19 crore) respectively. In absolute rupee terms, Siti Cable showed the highest YoY growth with Rs 14.97 crore (6.8 percent), while Hathway had the highest QoQ growth in terms of absolute rupees at Rs 9.62 crore (3.6 percent)

    EBIDTA

    Overall, operating profit or EBIDTA of 3 of the four companies has been increasing since Q4-2015. It is only Den that has seen a decline to the red since Q3-2015.

    YoY, the combined Earnings Before Interest, Depreciation, Tax and Amortisation (EBIDTA) of the four companies in Q2-2016 reduced by a massive 38.6 percent (reduced by Rs 50.73 crore) to Rs 80.57 crore as compared to Rs 131.30 crore, but increased 4.4 percent  (increased by Rs 3.37 crore) QoQ as compared to Rs 77.19 crore.

    Both Siti Cable and Ortel saw YoY and QoQ growth in EBIDTA in Q2-2016. In the case of Den, EIBIDTA declined both YoY and QoQ in the current quarter. Hathway’s EBIDTA declined YoY, but increased QoQ. Please refer to Fig 2 below.

    Cable TV Operations

    The major contributors to revenues of the four companies Cable TV Operations are Subscription revenues and Carriage or Placement fees. Activation fees also contribute to Cable TV Operations revenue.

    It must be noted that Cable TV Operations revenue in this article and the chart below includes only these three streams. Other revenues which are not included are Advertisement revenue, sale of traded goods, lease rentals, management charges, other networking and other income, etc.

    As mentioned above, all the four companies in this article reported QoQ increase in total income from their Cable TV operations in the current quarter. YoY also, three of the four companies reported growth in revenue from their Cable TV operations.

    The combined total revenue from Cable TV Operations of the four companies was almost flat (reduced by less than 0.1 percent or Rs 0.7 crore) YoY at Rs 699.20 crore as compared to Rs 699.90 crore and increased 1.4 percent (increased by 11.1 crore) QoQ from Rs 688.10 crore.

    Please refer to Fig 3 below that shows a snapshot of revenue from Cable TV operations. In terms of revenue from Cable TV Operations, Siti Cable overtook Hathway in Q3-2015 and is now placed second among the four with Den placed at the pole position.

    The company with the highest YoY and QoQ growth in terms of absolute rupees was Siti Cable with revenue from Cable TV operations growth of Rs 11.40 crore (grew by 5.5 percent) and Rs 5.40 crore (grew by 2.5 percent) respectively. Siti Cable’s Cable TV Operations revenue in the current quarter was Rs 218.20 crore, in Q2-2015 it was Rs 206.80 crore and in the immediate trailing quarter, it was Rs 212.80 crore.

    Ortel had the highest YoY and QoQ growth in Cable TV Operations revenue in percentage terms.  Ortel’s Cable TV Operations revenue grew 12.3 percent (increased By Rs 3.40 crore) YoY and grew 8.8 percent (increased by Rs 2.5 crore) QoQ.

    Cable TV Subscription Revenue

    The combined Cable TV Subscription revenue of all the four companies in Q2-2016 increased YoY and QoQ by 0.2 percent (increased by 0.80 crore) and 2.2 percent (increased by Rs 8.10 crore) respectively. Combined Cable TV Subscription revenue in the current quarter was Rs 381.60 crore, in Q2-2015 it was Rs 380.80 crore and in the immediately trailing quarter it was Rs 373.50 crore.  Siti Cable’s Cable TV Subscription revenues have been the highest among the four players in this report.

    Last quarter (Q1-2016), despite the flat  QoQ ARPUs and higher subscription numbers, Siti Cable’s Cable TV Subscription revenue fell QoQ because  the company had initiated strict measures against erring LCO’s and had switched off signals to the extent of about 4 lakh cable TV consumers say industry sources. The action seems to have been partly successful, because the company’s QoQ Cable TV Subscription revenue increased by 7.4 percent, but did not achieve the Rs 142.40 crores of revenue levels it had in Q4-2015.

    Please refer to Fig 4A below. In absolute rupee terms, Siti Cable’s Cable TV subscription revenue growth was the highest, both YoY and QoQ at Rs 3.50 crore (increased by 2.6 percent) and Rs 9.50 crore (increased by 7.4 percent) respectively. For the current quarter, Siti Cable had Cable TV Subscription revenue of Rs 138.50 crore, in Q2-2015 Siti Cable’s Cable TV Subscription revenue was Rs 135 crore and it was Rs 129 crore in the immediate trailing quarter.

    In percentage growth terms, Ortel’s Cable TV Subscription revenue increased by 4 percent (increased by Rs 0.80 crore), while QoQ, it was Siti Cable that reported the highest growth in terms of percentage in the current quarter as compared to the immediate trailing quarter, as mentioned above.

    Please refer to Fig 4B below.  Though Cable TV Subscription revenue has been increasing in absolute rupees, its contribution to Cable TV revenues has been declining. In the case of Den and Hathway, which have more number of Cable TV subscribers, Cable TV Subscription revenue’s contribution to Cable TV revenue was around 50 percent, while in the case of Siti Cable and Ortel, Cable TV Subscription revenue contributes to around two thirds to Cable TV revenues. The author would like to remind the reader that Cable TV revenue in this report includes only Subscription, Carriage or Placement and Activation revenues only.

    Carriage Fees or Placement Revenue

    Combined Carriage Fees of the four companies saw a 5.9 percent (Rs 16.70 crore) decline QoQ to Rs 265.80 crore as compared to the Rs  282.50 crore and was flat YoY as compared to Rs 265.80 crore.

    Three of the four companies saw a YoY growth in Carriage fees, while Den Carriage Fees declined both YoY and QoQ. Siti Cable saw the sharpest QoQ decline in Carriage Fees of 17.3 percent (reduced by Rs 12.6 crore).  Hathway and Ortel saw YoY and QoQ growth in Carriage Fees. Please refer to Fig 5 below.

    Carriage Fees contribution to Cable TV revenue shows an increasing trend in the case of Hathway and Ortel, while in the case of Den and Siti Cable the trend is declining. Please refer to Fig 5B below.

    Broadband Subscription revenue

    As mentioned above, all the four companies have reported growth in Internet Subscription revenue. The combined Internet Subscription revenue of the four companies increased 62.1 percent (increased by Rs 37.1 crore) YoY to Rs 96.80 crore in the current quarter as compared to Rs 59.70 crore and increased 12.2 percent (increased by Rs 10.50 crore) QoQ as compared to Rs 86.30 crore.

    Please refer to Fig 6 below. Hathway has the highest number of internet subscribers among the four players and its Internet Subscription revenue grew the highest in terms of absolute rupees YoY by Rs 26.50 crore (increased by 58.4 percent) and  by Rs 6.8 crore (increased by 10.4 percent) QoQ. In percentage terms, Den’s Internet subscription revenue grew to almost six-fold (increased to 5.85 times, by Rs 6.80 crore) and increased 57.7 percent (increased by Rs 3 crore) QoQ.

  • Bell Media to become sole operator of HBO in Canada across all platforms

    Bell Media to become sole operator of HBO in Canada across all platforms

     

    BENGALURU:  Canadian communication company BCE announced yesterday that its mass media subsidiary Bell Media will expand The Movie Network (TMN) into a national pay TV service and become the sole operator of HBO Canada, as Corus Entertainment winds down operations of its Movie Central and Encore Avenue pay TV services in Western and Northern Canada to focus on its core national media brands.

     

    Under the comprehensive, long-term agreement, the first of its kind for HBO in Canada, Bell Media will have the ability to deliver current-season, past-season, and library HBO programming exclusively on its linear, on-demand, and over-the-top (OTT) platforms in English and French. The agreement also marks the first time HBO has granted exclusive subscription video on demand (SVOD) rights for first-run programming throughout Canada. As a result, Bell Media will have the flexibility to provide current HBO content such as Game of Thrones, Girls, and Veep over-the-top in Canada on its platforms.

     

    “Bell Media now has the national scale required to create, negotiate and deliver more premium TV programming to Canadian consumers, across more platforms and more quickly than ever before,” said Bell Media President Mary Ann Turcke,. “Our extensive new content agreement with HBO for both traditional TV and next-generation platforms like CraveTV and with significant original co-production opportunities, is a great example of the benefits for Canadian viewers nationwide.”

     

    BCE will pay Corus a consideration of $211 million, $195 million net of tax benefits, to support the national expansion of TMN and HBO Canada, equivalent to a valuation multiple of approximately 5.6x fiscal 2015 EBITDA of Movie Central and Encore Avenue after operational synergies are applied.

    Bell Media is a multimedia company with assets in television, radio, out of home and digital media, including Canadian television network CTV, and has the Canada’s most-watched specialty channels.

     

    Bell Media is a Canadian multimedia company with leading assets in television, radio, out of home and digital media, including CTV, Canada’s #1 television network, and gas Canada’s  most-watched specialty channels.

     

  • Shift to broadband in US cable industry will mitigate TV subscriber loss: Moody’s

    Shift to broadband in US cable industry will mitigate TV subscriber loss: Moody’s

    BENGALURU: Rising demand for broadband services will compensate for the loss in TV video subscribers and help sustain industry growth through 2016, says Moody’s Investors Service. As a result, the rating agency maintains its stable outlook on the US cable industry.

     

    Broadband gaining ground, video slides, voice stable

     

    Key takeaway:

    The key takeaway is that the broadband offset is substantial, and much higher than in the past couple of years. In 2013, for every video subscriber lost, cable signed up 1.4 broadband customers. In 2016, Moody’s are projecting a 2.4x multiple.

     

    Broadband subscribers outnumbered total video subscribers in Moody’s rated universe for the first time at the end of 2014, and the agency forecasts that this spread will widen to seven per cent by the end of 2016 as demand for broadband continues to grow.

     

    “This change in subscriber demand represents a fundamental shift in consumer appetite and the economics of the cable business model,” said Moody’s vice president and senior analyst Jason Cuomo. “The loss of video subscribers is a fundamental weakness, but broadband demand and pricing actions are more than fully offsetting the negative video trends.”

     

    The report says that broadband demand continues to grow faster than pay-TV subscriber losses. Companies in Moody’s rated universe had a little more than 126 million (12.6 crore) Revenue Generating Units (RGU – equal to the number of subscriptions at a service level) at the end of last year. Moody’s project that RGUs will grow to over 130 million (13 crore) by the end of 2016, representing a CAGR of approximately 1.7 per cent. Broadband is now the leading product, as video continues to slide and the number of phone customers holds steady.

     

    Moody’s says that the number of pay-TV subscribers in its universe has gone done from 50 million (5 crore) in 2013 at the rate of about 1 million (10 lakh) per year and its predicts that by 2016, the number will reduce to 46 million (4.6 crore). During the same period, broadband subscribers would increase from 49 million (4.9 crore) in 2013 to 57 million (5.7 crore) by 2016. Voice subscribers in 2013 at 25 million (2.5 crore) would increase to 27 million (2.7 crore) by 2016.

     

    Phone subscribers have also been growing between three – four per cent, but the report says that the pace is trending down and could moderate to below two per cent by 2016.

     

    Lower revenues, better margins

     

    This mix shift has changed the economics of the business, with the top line suffering from the loss in video revenues, while creating opportunities to grow EBITDA and margins that are better in broadband.

     

    The industry continues to raise prices for broadband services, driving average revenue per unit higher. Demand is being largely driven by video consumption, which requires more and faster bandwidth, positioning cable companies to further monetize their high-speed distribution system. At the centre of this transformation is streaming content “over-the-top” to deliver video-on-demand services, which is growing quickly, according to the report “Pricing, Broadband Demand Ease Pressure from TV Subscriber Losses.”

     

    The report says that Broadband generates much lower revenues than residential TV, (roughly half, on average) but much higher margins and EBITDA per customer. In addition, the business is growing much faster than the rate of loss in video subscribers (more than 2:1,) which supports both revenue and profits.

     

    Pay-TV produces the highest revenue per customer among the three main service offerings, significantly exposing the top line when subscribers defect. To put the risk in context, Charter’s annual video revenue per residential subscriber was $1,068 in 2014, much higher than the $540 for residential broadband and $235 for residential phone service. However, programming costs are high, and rising despite the loss of revenue, squeezing EBITDA and margins.

     

    The net effect of the mix shift is revenue growth of nearly four per cent, a rise in EBITDA of approximately three – four per cent, and relatively stable EBITDA margins of 38-39 per cent.

     

    “Despite the concerns that the cable industry is about to lose its competitive footing, it still maintains a steady share of the triple-play bundle — offering a package of video, broadband and phone services,” said Cuomo.

     

    Growth drivers are new subscribers, SMEs

     

    The large majority of growth is coming from new residential customers. Commercial is only a small contribution but growing quickly. Small to medium-sized business demand for broadband is growing and cable is attracting their business with competitive speeds. Time Warner Cable and Charter, for example, have reported growth rates over the last four years that average 15 per cent and 22 per cent, respectively.

     

    Although their commercial businesses are less than five per cent of total revenues, for both companies, new commercial broadband subscribers represented approximately eight per cent of all new broadband subscribers in 2014.

     

    Video going over-the-top, but on cable’s terms

     

    In video, the big story continues to be consumer demand for viewing content ‘Over-the-Top’ (OTT) on multiple devices — arguably the number one threat facing cable. OTT is the epicentre of risk in an industry at the very early stages of a rapid transformation. The speed of broadband, proliferation of devices, and emergence of content streamers such as Netflix Inc. have made this type of “non-linear” alternate possible. The pace is accelerating (Netflix now has over 40 million subscribers, starting from zero in 2007 when it was first introduced in the US) as the awareness of alternate viewing options grows. This may also be at least partially responsible for driving subscriber losses — although Moody’s believes the great majority of users are also pay-TV subscribers that migrated OTT as a complimentary service.

     

    Content companies facing huge challenge

     

    Rapid development of new content, more widely distributed through new media channels, over a larger number of devices, and at lower cost, is a huge challenge for content owners struggling to maintain market leverage by controlling content rights. Extracting value from every property they own is easier when it’s all sold in a bundle. This neat and simple packaging model is beginning to break down, however, as content is offered in skinnier bundles and a la carte. In this model, the value shifts to the highest-quality content assets, exposing those with lower viewer ratings and therefore lesser value.

     

    As the industry transforms, the friction of change could temporarily slow video-subscriber defections. The move to OTT can be stalled by a rise in broadband price or recognition that stacking OTT content is more costly than expected, especially when buying sports and other high-value content. Content unbundling and programming offered via apps may also create confusion and inconvenience for the customer. Issues including new bills to manage, more frequent ID authentications, and the need to search, find, and switch between apps may end up being more cumbersome than simply switching channels on a cable remote. Until addressed, these issues will help cable buy time.

     

    Cable’s pricing power is driving ARPU higher

     

    The industry has consistently raised prices as they continue to pass through most of the rising programming costs and charge higher rates for more services. This pricing power could rise further once pending acquisitions are completed. Based on Moody’s forecast for ARPU of $837 by the end of 2016, the CAGR will be approximately 2.5 per cent from 2013 with a slope in ARPU that has been essentially linear, despite the rise in competitive threats. This has been largely driven by the rise in content costs, but can also occur as owners attempt to reprice OTT programming on the same, or similar, terms as current pay-TV economics.

     

    Moody’s expect this trend to continue given cable’s strong market position. In particular, we think the cable industry is positioning itself to charge higher prices for broadband to offset the loss in video ARPU. This could come in the form of higher prices for more data consumption, faster speeds, data limits that force customers to pay for higher speeds, or a fee for the use of Wi-Fi hot spots, which so far has been free. Given the high cost of mobile broadband and limited coverage of mobile Wi-Fi, viewing streaming video in-home, on cable Wi-Fi is currently one of the lowest-cost/highest-quality experiences available — and ripe for price increases.

     

    While there is healthy growth in prices, competition will keep growth rational. Another major constraint to higher broadband pricing is regulation, now that broadband is subject to Title II of the Communications Act of 1934. Price hikes are likely to be tolerated by regulators, but only as long as they are reasonable and customary. The government has stated that they are disinterested in pricing regulation, but their position would likely change if prices rose aggressively and consumer complaints mount. Moody’s outlook assumes no regulatory intervention.

     

    Industry Consolidation

     

    Moody’s notes that industry consolidation resulted in a number of transformative deals over the past year, but further consolidation is unlikely through 2016 given the size and concentration of the largest and smaller players.

  • Q2-2016: PVR net profit up 347% at Rs 41.1 crore

    Q2-2016: PVR net profit up 347% at Rs 41.1 crore

    BENGALURU: Indian motion picture exhibition, production and distribution house PVR Limited (PVR) reported more than fourfold increase in profit after tax (PAT) in the quarter ended 30 September, 2015 (Q2-2016, current quarter) as compared to the corresponding year ago quarter. PVR’s PAT for Q2-2016 at Rs 41.05 crore (8.6 per cent margin) was 4.46 times the PAT of Rs 9.20 crore (2.1 per cent margin) reported for Q2-2015, but 29.3 per cent lower than the Rs 58.45 crore (12 per cent margin) in Q1-2016.

     

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

    All numbers are consolidated unless stated otherwise.

     

    Total Income from Operations (TIO) in Q2-2016 at Rs 474.60 crore was 18.9 per cent more YoY than Rs 399.30 crore, but declined 2.3 per cent QoQ from Rs 486.02 crore.

     

    Box Office performance

     

    PVR’s top five box office performers in terms of Gross Box Office (GBO) were: Bajrangi Bhaijan (GBO Rs 72.02 crore, 34.8 lakh admits, average ticket price or ATP – Rs 207); Baahubali – The Beginning (GBO Rs 48.54 crore, 27.9 lakh admits, ATP – Rs 174); Welcome Back (GBO Rs 22.16 crore, 11.5 lakh admits, ATP – Rs 193); Drishyam (GBO Rs 18.74 crore, 10.3 lakh admits, ATP 0 Rs 183) and MI Rogue Nation (GBO Rs 17.99 crore, 8.5 lakh admits, ATP – Rs 212).

     

    Net Box Office (NBO) collections in the current quarter increased 20.3 per cent to Rs 274.55 crore (59.5 per cent of Total Revenue) as compared to the Rs 228.15 crore (61.5 per cent of Total Revenue) in Q2-2015 and flat as compared to the Rs 249.12 crore (59.3 per cent of Total Revenue) in Q1-2016.

     

    Q2-2016 saw admits increasing by 20 per cent to 1.88 crore with an occupancy of 37 per cent as compared to 1.57 crore with an occupancy of 32 per cent in Q2-2015 buts declined slightly QoQ a as compared to 1.90 crore and an occupancy rate of 38 per cent. ATP in the current quarter also improved to Rs 187 from Rs 181 in Q2-2015 and Rs 183 in Q1-2016.

     

    Food and Beverages and Advertisement revenue

     

    Food and Beverage (F&B) share of Total Revenue was 25.9 per cent at Rs 119.59 crore as compared to 24.5 per cent at Rs 90.81 crore in Q2-2015 and 28 per cent at Rs 117.87 crore in Q1-2016. Advertising share to revenue in the current quarter dropped in percentage terms to 10 per cent but increased in value terms to Rs 46..13 crore as compared to 10.9 per cent (Rs 40.65 crore) in Q2-2015 and was slightly higher in percentage terms than 9.9 per cent (Rs 41.62 crore) in the immediate trailing quarter.

     

    Let us look at the other numbers reported by PVR

     

    The company has reported positive operating results in Q2-2015 from Movie Exhibition segment at Rs 61.90 crore, which was more than double (2.34 times) the Rs 26.46 crore in Q2-2015, but declined 23.1 per cent as compared to the Rs 80.54 crore in Q1-2016.

     

    Movie production and distribution (Production) as well as ‘Others,’ which includes bowling, gaming and restaurant services, etc., reported operating losses in the current quarter as compared to the operating profits in the immediate trailing quarter.

     

    PVR’s Production segment operating revenue declined by more than half (down 54.6 per cent) to Rs 8.56 crore as compared to the Rs 18.87 crore in Q2-2015, but was 13.7 per cent more than the Rs 7.53 crore in the immediate trailing quarter. The segment reported operating loss of Rs 0.46 crore in the current quarter as compared to an operating profit of Rs 1.34 crore in Q2-2015 and an operating profit of Rs 1.87 crore in Q1-2016.

     

    ‘Others’ segment reported a 4.7 per cent increase in YoY revenue in the current quarter to Rs 19.05 crore as compared to Rs 18.19 crore in Q2-2015, but a 11.2 per cent decline as compared to the Rs 21.46 crore in Q1-2015. The segment returned an operating loss of Rs 0.65 crore in the current quarter as compared to an operating loss of Rs 0.96 crore in Q2-2015 and an operating profit of Rs 0.82 crore in the previous quarter.

     

    Total expense in Q2-2016 at Rs 413.83 crore (87.2 per cent of TIO) was 11.2 per cent more YoY than the Rs 372.07 crore (93.18 per cent of TIO) and 2.7 per cent more QoQ than the Rs 402.77 crore (82.9 per cent of TIO).

     

    The company’s film exhibition cost increased 21.7 per cent YoY at Rs 113.53 crore (23.9 per cent of TIO) as compared to Rs 93.25 crore (23.4 per cent of TIO) and was almost flat QoQ as compared to Rs Rs 113.69 crore (23.4 per cent of TIO).

     

    F&B and other cost in Q2-2016 increased 11.7 per cent YoY to Rs 32.01 crore (6.7 per cent of TIO) as compared to Rs 28.65 crore (7.2 per cent of TIO) and was 7.5 per cent lower than the Rs 34.59 crore (7.1 per cent of TIO) in Q1-2015.

     

    Other expense in Q2-2016 declined 4.3 per cent to Rs 43.51 crore (9.2 per cent of TIO) as compared to the Rs 45.46 crore (11.4 per cent of TIO) in Q2-2015, but was 15.3 per cent more than the Rs 37.72 crore (7.8 per cent of TIO) in Q1-2016.

  • Technicolor to acquire Cinram’s DVD business for €35 – 40 million

    Technicolor to acquire Cinram’s DVD business for €35 – 40 million

    MUMBAI: Technicolor is planning to acquire Cinram Group’s North American optical disc manufacturing and distribution assets. The move comes in the wake of Technicolor’s advanced negotiations with two large US customers to assume their contracts for the replication and distribution of packaged media products (DVD and Blu-ray discs) in North America.

     

    The value of the acquisition in the range of €35 – 40 million and will be entirely funded out of available cash.

     

    As a result of this acquisition, Technicolor’s expanded operational platform could also serve to support other new customer additions in North America, in a manner consistent with the Group’s strategy of optimising the operating leverage of its packaged media products activities.

     

    The purchase agreement with Cinram Group, Inc. is subject to obtaining certain consents as well as other customary closing conditions.

     

    The transfer of the contracts and assets to Technicolor could occur as early as November 2015.

     

    The customer contracts, if concluded, would add in excess of €190 million in annualised revenues to Technicolor’s Entertainment Services segment. This would have no impact on the Group’s Adjusted EBITDA and Free Cash Flow objectives for 2015.

  • 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.