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Tag: GTPL

  • DAS Phase II: Indiacast-Hathway- GTPL slugfest on DAS deals

    DAS Phase II: Indiacast-Hathway- GTPL slugfest on DAS deals

    MUMBAI: A war of sorts has broken out between India‘s second largest content aggregator IndiaCast Media Distribution and Hathway Cable and Datacom, the country‘s biggest Multi System Operator (MSO) and its affiliate GTPL, Gujarat‘s largest MSO with footprints in other states too.

    This is happening at a time when the entire broadcast and cable TV industry and government have been grappling with how to deal with the Phase II digitisation (DAS) of India‘s cable TV. And it clearly reveals how much more needs to be done to make the government‘s agenda to professionalise and spruce up India‘s cable TV sector a reality. (MIB wants MSOs-b‘casters to sign DAS agreements within 15 days )

    Now on to the problem between IndiaCasat and GTPL and Hathway. Both Hathway and GTPL have switched off IndiaCast channels in multiple markets across India including Gujarat, Maharashtra, West Bengal, and Madhya Pradesh as the latter is demanding a reduction in carriage fee and growth in subscription fee.

    IndiaCast distributes 35 channels from the TV18, Viacom18, Disney UTV and A+E Networks spanning across Hindi general entertainment, news, kids, youth and regional genre.

    Hathway, on the other hand, has cable operations that straddle across key Indian geographies and offers cable television services across 140 cities and towns.

    However, Hathway and GTPL feel IndiaCast‘s demand is unjustified. Their contention is that the time is not ripe for a carriage fee reduction or an increase in subscription fee payouts as they have hardly started collecting money from the ground.

    IndiaCast though feels that its demand is justified as the analog cable TV networks around the country are being digitised in a phased manner which will lead to broadcasters getting their fair share of subscription revenue due to transparency in subscriber base of LCOs.

    The content aggregator alleges that both Hathway and GTPL want to maintain status quo by doing deals similar to that in the analogue era. According to IndiaCast, the two MSOs also want to revisit phase I deals which were done on cost-per-subscriber basis.

    Hathway Cable and Datacom MD and CEO Jagdish Kumar feels the broadcasters‘s maw is increasing and they are unwilling to support the MSOs in this transition phase.

    “Broadcasters have become too greedy. They are behaving like ostriches. They want a reduction in carriage fee and a growth in subscription revenue. Reduction of carriage fee is not going to happen overnight. As far as growth in subscription revenue goes, the MSOs themselves have not started collecting money from the ground,” thunders Kumar.

    Kumar‘s suggestion to broadcasters is to do “equitable” deals till the situation on the ground stabilises particularly since the MSOs have made large investments in making digitisation a reality.

    “We also have to look at returns on the investments that we have made so far,” adds Kumar.

    The dispute that began end of December has reached the sector regulator‘s door. The Telecom Regulatory Authority of India (Trai) has asked GTPL to respond by 10 April to a complaint filed by IndiaCast alleging abuse of its dominant position in Gujarat.

    Says IndiaCast COO Gaurav Gandhi, “GTPL‘s intention is to use these coercive methods on broadcasters and aggregators to pressurise them to keep DAS deals in line with what was there in the analogue regime – at any cost they don‘t want a reduction in their carriage income. Almost all our deals in DAS Phase I were done on a cost-per-subscriber model. We have written to Trai on the violations done by GTPL & Hathway and the regulator has now asked GTPL to respond by 10 April.”

    In its complaint, IndiaCast has alleged that Hathway and its affiliate GTPL illegally collided to coerce IndiaCast into acceding to their demands including increasing the placement fees, reducing subscription fees and also to re-open DAS Phase I deals already executed.

    Giving his perspective on the dispute, GTPL president Sumit Bose says that the MSO has followed Trai regulations in letter and spirit while dealing with IndiaCast. GTPL, he says, had an agreement with IndiaCast till 31 March 2013.

    He claims that IndiaCast itself did not respond to GTPL‘s offer of working on a new deal for phase II for almost two and a half months. IndiaCast officials did get in touch with GTPL by that time the company‘s management had decided against entering into a new deal with IndiaCast.

    “IndiaCast was never inclined to sit across the table to discuss the deal with us despite our keenness. We waited for more than two and a half months but there was no response from them (IndiaCast). Since we did not get any response, the GTPL management decided to switch off the channels as we had to look at our own business objectives as well,” affirms Bose.

    The MSO then switched off IndiaCast channels in Gujarat citing financial unviability.

    However, IndiaCast‘s Gaurav Gandhi is amused with the idea. On the contrary, he feels that the deal is unviable for IndiaCast as its analogue deal had it paying out more in carriage fees than the subscription fees that accrued to it courtesy GTPL.

    “Both GTPL and Hathway have cited financial unviability and financial constraints as reasons for discontinuation of deals for IndiaCast channels. This is the basis of the notice they sent for their existing deals – and these existing deals are where we were paying them more carriage, then they are paying us for subscription. So how can a deal be financially unviable for the MSO if they are receiving more than they are paying? This clearly demonstrates the strong-arm tactics and the intentions of GTPL and Hathway,” avers Gandhi.

    Bose strongly denies charges of strong arm tactics by IndiaCast. To buttress his point, he says that Gujarat is as competitive a market as any other market in India is, with the presence of several leading MSOs and DTH operators.

    According to Bose, it is quite optimistic on the part of anyone to think that carriage fees will come down so soon despite digitisation. He also asserts that GTPL has managed to retain its carriage fee level in the deals they have done so far to what they were earlier.

    “I don‘t see the carriage fee coming down in the near term. Particularly the market that we are operating in, we expect to cross our own expectations on the carriage front. The deals we have done so far are in line with our expectations,” declares Bose.

    The last word on the dispute has not yet been said.

  • Hathway Cable in process of finalising fresh terms with LCOs in digital markets

    Hathway Cable in process of finalising fresh terms with LCOs in digital markets

    MUMBAI: Hathway Cable & Datacom, India‘s leading multi-system operator (MSO), has said that on account of digitisation it is in the process of finalising fresh terms with local cable operators (LCOs) in Mumbai and Delhi, the only cities in first phase where it has a direct presence. In Kolkata, Hathway has a presence through JV partner GTPL KCBPL.

    Pending such finalisations, the management has on estimated basis recognised activation fees and subscription income in these two cities, which is based on on-going discussion with LCOs, market trend and considering the collection made till date.

    The management has reasonable certainty of collecting the amount recognised as income, Hathway said.

    Meanwhile, the company has seen its fiscal third quarter net loss widen to Rs 74.2 million from Rs 17.8 million in the preceding quarter on account of foreign exchange loss and decrease in other income.

    Hathway suffered a foreign exchange loss of Rs 14.89 million compared to a gain of Rs 44.78 million during the fiscal second quarter. The company‘s other income decreased to Rs 13.55 million from Rs 30.63 million.

    Net income from operations during the quarter, which saw the roll-out of first phase of digitisation, rose to Rs 1.53 billion from preceding quarter‘s Rs 1.3 billion.

    Led by increase in pay channel cost and purchase of stock in trade, the expenses for the quarter also jumped to Rs 1.47 billion from Rs 1.37 in the earlier quarter.

    The pay channel cost increased to Rs 429.6 million from Rs 390.4 million while the purchase of stock in trade grew to Rs 43.06 million from Rs 16.48 million.

    The exceptional item includes the amount company spent on Digital Addressable System (DAS) which is Rs 26.79 million for the quarter as opposed to Rs 7.61 million in the previous quarter.

    As of 31 December 2012, Hathway has utilised the entire amount of Rs 3.25 billion from the IPO proceeds that it had proposed to spend on development of digital capital expenditure, services and set-top boxes as well as development of broadband infrastructure.

    The company has spent Rs 124.86 million on customer acquisition out of the proposed Rs 150 million.

  • Digitisation: Hathway needs Rs 3 bn in 2nd phase; no plans to dilute equity

    Digitisation: Hathway needs Rs 3 bn in 2nd phase; no plans to dilute equity

    MUMBAI: Hathway Cable & Datacom plans to invest Rs 3 billion for the second phase of digitisation as it details a requirement of around 3.5 million set-top boxes (STBs) to place in consumer homes across the cities where its cable TV service is available.

    Hathway will not need to raise equity financing and will fund the second phase through a mix of debt and vendor financing.

    “We are under no pressure to raise equity financing and have adequate headroom for getting additional debt. We also have vendor financing facilities. Of the total investments that we make, 70 per cent will be through vendor financing,” Hathway Cable & Datacom managing director and CEO K Jayaraman tells Indiantelevision.com.

    Hathway’s net debt stands at Rs 4.60 billion, including Rs 1 billion of vendor credit.

    The multi-system operator (MSO) has already seeded 1.5 million STBs in the 22 cities that fall under the next round of digitisation. The government has mandated 31 March 2013 as the deadline for digitisation in 38 cities, but industry experts feel an extension would be granted for a limited period.

    “Our preliminary estimate is that we would have a demand for five million STBs. We have already deployed 1.5 million boxes,” says Jayaraman.
    Hathway expects to deploy 2.5 million STBS in the first phase of digitisation where it operates in three of the four metros. While in Mumbai and Delhi it operates directly, in Kolkata it has a presence through its joint venture company Gujarat Telelinks Pvt Ltd (GTPL). GTPL, in which Hathway has 50 per cent stake, acquired majority stake in Kolkata Cable and Broadband Pariseva.

    “We have already seeded 1.7 million STBs in the three metros. We have set an internal target of 2-2.5 million boxes as we see a rising demand,” elaborates Jayaraman.

    Hathway spent Rs 1.20 billon on capital expenditure in the first half of this fiscal. For the three-month period ended 30 September, Hathway narrowed its net loss to Rs 17.84 million against Rs 158.71 in the trailing quarter. Revenue fell three per cent to 1.32 billion from Rs 1.36 billion in the first quarter.

  • ‘Digitisation will not spur irrational price war as the Santa Clauses are broke’ : Hathway Cable & Datacom MD and CEO K Jayaraman

    ‘Digitisation will not spur irrational price war as the Santa Clauses are broke’ : Hathway Cable & Datacom MD and CEO K Jayaraman

    Hathway Cable & Datacom has an ambitious investment plan of Rs 10 billion as India opens up to digitisation across the country.

     

    In the first phase, India’s leading multi-system operator (MSO) plans to invest Rs 1.75 billion even as it expects DTH to take away 10-15 per cent of its cable TV subscribers in the two lucrative markets of Delhi and Mumbai.

     

    Sitting on a cash pile of Rs 2 billion, Hathway will not source equity finance at this stage. Though net losses will drag on for a long period in a digital environment, the MSO hopes to regain its old valuations if it manages to successfully implement the early phase of digitisation.

     

    Even as carriage revenue will shrink, Hathway’s endeavour will be to have an Ebitda of 20-25 per cent right from the start of mandated digitisation.

     

    In an interview with Indiantelevision.com’s Sibabrata Das, Hathway Cable & Datacom MD & CEO K Jayaraman talks about how no cable or direct-to-home company is in financial health to launch an irrational price war. He also elaborates on the MSO’s digitisation gameplan.

     

     

    Excerpts:

     

    DTH companies have made rapid progress in recent years. How is Hathway Cable & Datacom prepared to exploit the first phase of digitisation?
    We plan to invest Rs 1.75 billion in the first phase. This will include Rs 200 million towards marketing in Mumbai and Delhi over the next 6-8 months. It is the first time that we are splurging on media campaigns.

    Are you comfortably placed on the funding part or you plan to raise fresh capital?
    We have a cash pile of Rs 2 billion. We will not source equity finance at this stage. We are comfortably placed and will manage with bank debt and vendor credit.

    Will you need funding in the second stage?
    We will see when we reach there. We have already digitised around two million homes. We will need to digitise our remaining 6-8 million existing homes (including multiple TVs). Our funding requirement will be Rs 10 billion as we need to subsidise the set-top box (STB) cost and make further investment in infrastructure.

    Hathway was selling at Rs 500 a STB to its customers in voluntary digitisation. Will you further subsidise the boxes in a mandated digitisation environment?
    We are looking at charging Rs 750-790 a STB (including taxes) as the rupee has depreciated against the dollar.
    “LCOs will get a revenue share of 30-35%. They will gain from 2nd TV homes, operational efficiencies and Vas. Distributors will get a 5% rev share. They will also get a 30% share in carriage revenues”

    But DTH could go aggressive and there could be a price war situation?
    We won’t sell below this even if there is a price war. We do not have the financial resources to further subsidise the boxes.

     

    We, however, feel that no player is in a position to indulge in an irrational price war. Nobody in cable can do so. DTH will fight for market share on the basis of perception and brand. All the Santa Clauses are broke.

    Are you expecting a migration to DTH?
    We expect DTH to take away 10-15 per cent of our cable TV subscribers in the two lucrative markets of Delhi and Mumbai. But we see a surge in second TV homes. Besides, we will launch three packages – lower, middle and top-end. In all the packages, we will have a price advantage. Also, we will have more channels on offer than DTH because of our bandthwidth superiority.

    Will the supply of STBs be impacted due to a sudden rise in demand?
    We have ordered 1.3 million digital STBs and signed a letter of intent for another 0.5 million. We estimate our subscriber universe to be 1.5 million in Mumbai and Delhi. About 20 per cent of this will be second TV sets.

     

    We also have a presence in Kolkata through our joint venture company, Gujarat Telelinks Pvt. Ltd (GTPL), which acquired a 51 per cent stake in Kolkata Cable and Broadband Pariseva. We expect to at least seed 400,000 boxes there.

     

    We have already seeded 250,000 STBs on a voluntary basis in Delhi and Mumbai.

    Crucial to the whole implementation of digitisation is the appeasement of the local cable operator (LCO). Have you fixed the revenue share terms with them?
    The LCOs will get a revenue share of 30-35 per cent. There will be a loss of revenue for them but they will make up to some extent with the second TV homes, where they don’t usually charge anything from the subscriber. Besides, they will gain from operational efficiencies and will discover new homes in a digital environment. Also, there will be a revenue share for them from value-added-services (Vas). So they should reasonably settle with us.

     

    The distributors will get a five per cent revenue share. They will also get a 30 per cent share in carriage revenues. In Mumbai, we are comfortable with the distributors. There may be some issues in Delhi but we will manage to strike a smooth bond with them.

    Why haven’t the MSOs sat down together and decided on a common share for the LCOs who control the last mile to the consumer?
    That would attract the Competition Commission of India. But in any other form, we will make efforts to drive consensus up. We don’t want any fissure surfacing among the stakeholders. We can’t afford to derail DAS (Digital Addressable System).

    Do you expect carriage revenue to shrink considerably?
    We expect it to shrink by 30 per cent in the digital environment. This can even go up to 50 per cent. But we will be somewhat compensated by a reduction in content cost.

    How?
    We will do fixed fee deals with broadcasters and believe content cost in a digital scenario will fall in the region of 35 per cent. We are close to sealing deals with two big broadcasting companies.

     

    Even sports channels should allow us to price reasonably; customers should take it round-the-year. Otherwise, we will offer it on a-la-carte basis to consumers.

    Analysts predict that net losses of MSOs will drag on till at least 2016 in a digital environment?
    We can’t predict now. But Hathway aims to stay Ebitda positive. We expect our Ebitda to be at least in the 20-25 per cent range. We know it will be difficult at the early stage of digitisation but our endeavour will be towards achieving that range from the start.

    Hathway had fixed it IPO price band at 240-265 and the scrip is now quoting at Rs 116 per share. When will the valuation be regained?
    We will regain good valuations if we manage to seed the boxes. Investors are bothered about that and not about net profitability at this stage.

    Do you expect the second phase to be tougher for you?
    For Hathway, the ride in the second phase could be even smoother as we have already got a large population of digital subscribers on a voluntary basis in some of these major cities like Bangalore and Hyderabad. Our digital penetration in some of these cities is as high as 60 per cent. In Gujarat we have seeded 150,000 (out of our
    estimated current subscriber universe of 220,000) STBs, in Hyderabad we have 350,000 (out of 800,000) and in Bangalore we have a digital population of 275,000 (out of 400,000).

     

    And in Jaipur, Indore and Bhopal, we have a digital penetration of 40 per cent out of our current subscriber base. In Phase II, we are far ahead.

    Will you follow the acquisition route?
    We will not pursue acquisitions and will prefer to conserve capital for digitisation. We will not do any more analogue consolidation. It is bad to add analogue weight in the current circumstances. Our focus will be on digitsation.

     

    Post digitisation, we may be interested in acquisition in some of these cities. But it should come at the right price.

    Are you looking at launching value-added services?
    We will tie up with either Ericsson or Cisco for Video-on Demand (VoD) services. We will decide in March whom to partner with. We have launched HD services and also bundled it with our broadband offering. We hope it will enhance our average revenue per user (ARPU). We have 2000 HD subscribers. Given that we get Star bouquet on HD and spend on marketing, we expect HD to eventually account for 10 per cent of our subscriber base.

    Are you bullish on your broadband growth?
    Yes, that gives us an advantage over DTH. We are also ahead of the other big MSOs so far as broadband goes. We will be bundling broadband with digital cable to offer better value to the consumers. The broadband homes passed stand at 1.7 million and our actual subscribers are 400,000.
  • Pearl Broadcasting invests Rs 400 million in P7 News, Mumbai launch on 23 September

    Pearl Broadcasting invests Rs 400 million in P7 News, Mumbai launch on 23 September

    MUMBAI: Pearl Broadcasting Corporation has invested close to Rs 400 million in P7 News and is set to formally launch the Hindi news channel in Mumbai on 23 September.

    P7 has already signed up major cable networks including Incablenet, Hathway Cable & Datacom, Scod18 and Wire & Wireless India Ltd (WWIL).

    “Our investment so far has been close to Rs 400 million (barring distribution). For Mumbai, we are spending around Rs 50 million for distributing the channel on cable networks. We have already signed annual deals with the the major cable networks in Mumbai,” Pearl Broadcasting director Jyoti Narain tells Indiantelevision.com.

    Launched on 27 March in Delhi, the channel is already available in other Hindi speaking markets. “We have spent around Rs 80 million on distribution. We are available in the states including Madhya Pradesh, Chhattisgarh, Uttar Pradesh and Gujarat. We recently signed a deal with Gujarat Telelink Private Ltd (GTPL),” avers Narain.

    The free-to-air (FTA) channel is also available on Essel Group’s direct-to-home (DTH) company Dish TV and DD Direct Plus.

    With the tagline ‘Ek Umeed’ (a ray of hope), the channel has a staff count of 375 across 11 bureaus. The channel has six OB-vans for news gathering and an association with 600 stringers across the nation for news.

    “It is a very competitive space. We can’t compromise on content. Our focus is on social and developmental stories across the country,” adds Narain.

    With the Mumbai launch, the channel will have a new look and feel as new segments will be added. At present, P7 News runs over 20 news-based supplements in weekdays, while it picks up social issues and campaigns on weekends.

    Within six months of launch, the channel has roped in advertisers like Coca-Cola, Bata, and Morepen apart from a clutch of real estate companies.

    Pearl Group has a wide array of business interests spanning real estate, tourism, TV & film production and print publication.