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  • Can the Indian cable television industry truly head the US cable television industry way?

    Can the Indian cable television industry truly head the US cable television industry way?

    People often tend to compare the cable television industry in India with that of the US. They say that the industry is headed the US way. One of the crucial points is internet service and more specifically broadband service. This business and revenue growth alternative has been gaining a lot of attention from the cable television industry as an expansion strategy. Higher Average Revenue Per User (ARPU) in India, to the extent of 3 to 5 times the ARPU earned through transmission of television bouquets, certainly makes this service an attractive proposition.

     

    Comparisons with a mature market like the US may not work in India. Indian cable television players have a long road ahead before any comparison or trying to relate with the industry, in any way could even start to make sense.

     

    One of the foremost factors is money. According to the National Cable and Television Association, USA (NCTA), the total US broadband industry investments since 1994 is about US$ 1400 billion (4.7 per cent of the US’s estimated revenue for 2014) or 60.7 per cent of India’s nominal GDP of US 2308 billion in April 2015. Money can bridge the technology gap, leapfrog it, as it has in many instances in India.

     

    Of course, this leads to the oft repeated point about the high cost of implementation of all DAS phases. It is a foregone fact that the capex starved cable television industry with poor balance sheets is going to deploy more money towards that effort if it wants the government to allow it to remain in business. Delays in deadlines may be possible, but in the current scenario, DAS is there to stay and is required for the benefit of all stakeholders.

     

    Notwithstanding the bureaucracy logjam that India is notorious for, another major stumbling block is the slow and hugely over vamped judicial system (besides regulation) in India that could take years to decide on any dispute. Settling of civil disputes has no deadline in India. The cliché, for businesses, ‘time is money’, holds good here too.

     

    Let us look at internet services

     

    The number of internet users worldwide will surpass 3 billion (300 crore) in 2015, according to eMarketer, increasing 6.2 per cent next year to reach 42.4 per cent of the entire world’s population. By 2018, eMarketer estimates, nearly half the world’s population, or 360 crore people, will access the internet at least once each month.  

     

    eMarketer says that by 2016 India will jump the US as the second-largest internet user population. China leads the world in terms of number of internet users with estimated 66.98 crore users, followed by the US with 25.93 crore and India with 24.23 crore say eMarketer estimates. In 2016, the publication estimates an Indian internet user base of 28.38 crore, higher than the 26.49 crore projections for the US. By 2018, India’s estimated internet subscriber base will be 34.63 crore or probably in the range of about 25-28 per cent of the population of the country at that time. Indian population figures for 2013 are an estimated 125.2 crore. Current population estimates for the US are about 32 crore, or the US has an internet density percentage of about 80, while China’s internet density percentage is about 50 and India just under 20.

     

    “Inexpensive mobile phones and mobile broadband connections are driving internet access and usage in countries where fixed internet has been out of reach for consumers, whether that’s due to lack of infrastructure or affordability,” said eMarketer senior forecasting analyst  Monica Peart. “While highly developed markets are nearly saturated in terms of internet users, there’s significant room for growth in emerging ones; for example, India and Indonesia will both see double-digit growth in each year between now and 2018.”

     

    The growing youth population is another important driver, as the most technologically savvy, and their demands shape internet development itself, says a Euromonitor report.

     

    According to the Telecom Regulatory Authority of India (TRAI), India had a wireline broadband subscriber base (speed greater than 512 kpbs) of 155.2 lakh and 852.3 lakh wireless broadband subscribers as on 30 April, 2015 or 1007.6 lakh broadband subscribers totally. This means that less than 1 per cent of the total population of the country has broadband. There is no denying the fact that the potential is huge, more so for broadband.

     

    Siti Cable (Siti), a multi system operator (MSO), believes that its strategy of cross-selling broadband services to its existing cable television subscribers and new customers will provide it with an opportunity to increase ARPUs, increase retention rates, ensure higher sustainable EBITDA margins and leverage upon its existing pan India presence.

     

    A few players such as medium sized MSO Atria Convergence Technologies (ACT) had actually changed its strategy since 2012 and started focusing more on broadband services, without losing focus on its MSO operations. It offers broadband internet in areas where it does not have cable subscribers. Despite being a regional player, ACT is the second largest private wired broadband player in the country, just after the mobile telecom behemoth Airtel. ACT’s broadband subscriber base has grown by 43.76 per cent to 6.11 lakh in the 12 months until 31December, 2014. As on 30 April, 2015, ACT had a wired broadband subscriber base of 6.8 lakh.

     

    However, ACT has followed a different strategy when compared to the other MSOs who use DOCSIS on the existing television cable for internet delivery. The company has laid separate optic fibre lines for internet delivery and hence owns even the last mile, rather than use its existing cable infrastructure and be dependent upon the LCOs’ whims and fancies.

     

    It must also be noted that the number of internet subscribers that each major cable television player in the US has runs in crores in a couple of cases. The largest MSO in India in terms of cable subscribers – Den Networks, with about 130 lakh subscribers has less than half the customer relationships that Comcast’s Cable Communications segment has with 272.34 lakh subscribers, of which about 223.75 lakh are video subscribers and 223.69 lakh are high speed internet subscribers. While Den’s cable subscriber base is about 58 per cent of Comcast Cable Communications segment, its internet subscriber base as on 31 March, 2015, is a small fraction at just 23,000 or just a little more than one thousandth of the internet subscribers that Comcast has. Even, ACT’s internet subscriber base of about 7 lakh is less than one-thirtieth of Comcast’s Cable Communications High-Speed internet subscribers. Is there any comparison?

     

    According to Nielsen’s 2015 Advance National TV Household Universe Estimate (UE), there are 11.64 crore TV homes in the U.S. prior to the start of the 2014-15 TV season. The number of homes represents a 0.5 per cent increase from Nielsen’s 2013-14 TV Household Universe Estimate. The number of persons aged 2 and older in U.S. TV Households is estimated to be 29.6 crore—also an increase of 0.5 per cent from last year. This puts the number of subscribers in the previous year as per Nielsen’s estimates at 11.58 crore.  The Indian carriage universe has 16.8 crore homes (44.3 per cent more than the estimated US TV homes) according to the FICCI- KPMG Indian Media and Entertainment Industry Report 2015. (FICCI-M&E 2015 report).

     

    The number of video subscribers through wire in the US as of 2013 was about 6.6 crore or the country had a cabletelevision percentage density just under 21. India has a TV home (TV Households or TV HH) density percentage of a little less than 13.5 (this includes DTH for India).

     

    Besides a number of cable television and IPTV service providers, the US has two big DTH players – Dish and Directv that had a combined subscriber base in Q1-2015 of approximately 341 lakh, or about 29 per cent of the total TV homes in the US estimated by Nielsen. India had an active DTH subscriber base of about 405.4 lakh (24.3 per cent of TV HH in India) as on 31 December, 2014.

     

     As mentioned above, in India, internet services ARPU is much higher than the ARPU from cable television services as compared to more mature markets such as the US, where it is the other way around. At the time of writing of this report, internet services monthly ARPU could be between 50 to 65 per cent of the video monthly ARPUs’ in the US. Video monthly ARPU would typically be in the range of US$ 75 to US$ 95, while internet monthly ARPU would range between US$ 40 to US$ 50. Is there an ARPU comparison? No way!

     

    Let us look at three players in the US. The entities in this report – Comcast Corporation’s Cable Communications segment, Time Warner Cable (TWC, about half the size of Comcast Cable Communications segment) and Charter Communications (Charter Comm) (About half the size again of TWC) represent about 32 per cent of the total US TV homes estimated by Nielsen.

     

    In Q1-2015, these entities combined video subscribers dropped by 6.12 lakh (1.61 per cent) to 373.47 lakh (32.09 per cent of Nielsen’s estimated TV Homes) from 379.59 lakh (32.77 per cent of Nielsen’s estimated TV Homes) in Q1-2014. Individually too, all the three entities reported loss of video subscribers in Q1-2015 to the extent of 1 per cent in the case of Comcast and Charter Comm and 3.08 per cent in the case of TWC, as compared to the corresponding year ago quarter. Despite the drop in video subscribers, the other two reported an increase in revenue from video in Q1-2015, while TWC even saw its video revenues drop by 1.04 per cent in Q1-2015 as compared to Q1-2014.

     

    The total number of internet subscribers of these three entities exceeded the total number of video subscribers in Q1-2015– internet subscribers grew to 392.5 lakh (5.1 per cent more than video subscribers) as compared to 369.45 crore (2.67 per cent less than video subscribers) in Q1-2014. All the three players reported increases in their internet subscription base as well as revenue from Internet in Q1-2015 when compared to the year ago quarter.

     

    Triple play (or triple product) subscribers increased in all the three cases, between 0.61 per cent in the case of Charter Comm to 14.49 per cent in the case of TWC and 4.26 per cent in the case of Comcast in Q1-2015 when compared to Q1-2014. TWC and Charter Comm’s double play subscriber base shrank 8.05 per cent and 0.6 per cent respectively, while Comcast’s double play subscription numbers increased in comparison during similar periods.

     

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

     

    (2) Revenues for US companies and some figures in this report have been mentioned in US$, million; subscription numbers in lakh or crore and TV homes in crore.

     

    (2) SARPU, a term similar to ARPU has been coined by the writer to bring terms to a common denominator for all the three US entities. To arrive at SARPU, the writer has added the quarterly revenues from each stream and divided the result by the number of customer relationships in that quarter and further divided the second result by 3 to arrive at a rough estimate of the revenue earned per relationship per month by the entity. Similarly, individual revenues from video, internet and voice streams/business have been divided by the number of subscribers of video, internet and voice streams respectively, further divided by 3 to arrive at an SARPU of that stream. Residential subscriber numbers have been used wherever available.

     

    (2.1) VIVE, another term coined by the writer, means video, internet and voice, the three main revenue generating streams or businesses for the three US entities in this report.

     

    (3) Voice numbers has been included, since there are number of overlaps in subscription numbers for VIVE of all the three entities.

     

    (4) ARPUs’ and SARPUs’ in this report are on a monthly basis unless stated otherwise.

     

    Comcast Cable Communications segment

     

    Comcast’s Cable Communications segment’s (probably the largest cable company and home internet services provider in the US) comprises 272.34 lakh relationships in Q1-2015 (quarter ended 31 March, 2015). The number grew by just 1.62 per cent from the 268 lakh in Q1-2014, and was driven by increases in double and triple product relationships.  This is what the cable industry in India is trying to ape – the double and triple play numbers.

     

    The breakup of these customers is 83.99 lakh single product, 2.39 per cent lower than the 86.05 lakh in Q1-2014; 88.90 lakh double product, 2.7 per cent more than the 86.56 lakh double product consumers in Q1-2014 and 99.45 lakh triple product consumers, 4.26 per cent more than the 95.39 lakh in  Q1-2014.

     

    The breakup of number of Comcast’s cable operations customers base on products is 223.75 lakh of video consumers in Q1-2015 – the number fell by 8000 as compared to the corresponding year ago quarter; 223.69 lakh high-speed internet consumers – the number increased by 4.07 lakh as compared to Q1-2014; and 112.70 lakh voices consumers – the number increased by 77000 as compared to the previous year ago quarter.

     

    Based on the financials filed by the company for Q1-2015, 69.16 per cent of the company’s consumers’ use two (double play) or more of its products, (up 127 basis points or 1.87 per cent higher) than the 67.89 per cent in Q1-2014.

     

    Let us examine the revenue that these businesses bring in for the company:

     

    Comcast’s Cable Communications segment revenue in Q1-2015 grew 6.26 per cent to US$ 11430 million from US$ 10757 million in Q1-2014. Combined revenue from Video, Internet and Voice (VIVE) businesses in Q1-2015 grew 4.89 per cent to US$ 9281 million (81.20 per cent of Cable Communications segment revenue) from US$ 8848 million (82.25 per cent Cable Communications segment revenue) in Q1-2014.

     

    Video revenue in Q1-2015 was US$ 5331million (57.44 per cent of VIVE revenue), 2.95 per cent more than the Rs 5178 million (58.52 per cent of VIVE revenue) in Q1-2014; Internet revenue in Q1-2015 grew 10.69 per cent to US$ 3044 million (32.80 per cent of VIVE) from US$ 2750 million (31.08 per cent of VIVE) in Q1-2014. Voice revenue fell 1.52 per cent in Q1-2015 to US$ 906 million (9.6 per cent of VIVE revenue) from US$ 920 million (10.4 per cent of VIVE revenue) in Q1-2014.

     

    A simple back of the envelope calculation as mentioned in Note 2 above shows the simple average monthly revenue per user (SARPU) of US$ 113.60 for Q1-2015, up 3.22 per cent as compared to the US$ 110.05 in Q1-2014.

     

    Similarly, Video SARPU grew 3.99 per cent in Q1-2015 to US$ 79.42 from US$ 76.37 in Q1-2014; Internet services SARPU grew 4.25 per cent to US$ 45.36 (56.97 per cent of video SARPU) in Q1-2015 from US$ 43.51 (57.12 per cent of video SARPU) in Q1-2014; Voice SARPU fell 5.06 per cent to US$ 26.80 from US$ 28.23 in the year ago quarter.

     

    Time Warner Cable

     

    Let us see how another big player in the US performed – Time Warner Cable (TWC).  In Q1-2015 the company saw its highest q-o-q growth in internet subscriber base since 2007 by 3.15 lakh to 119.90 lakh from 116.75 lakh in the quarter ended 31 December, 2014. Y-o-y, the company’s internet subscriber base grew by 6.32 lakh. However, the company’s video subscribers fell 3.08 per cent in Q1-2015 to 108.19 lakh from 111.63 lakh in Q1-2014. Voice subscribers increased 14.06 per cent in Q1-2015 to 56.04 lakh from 49.13 lakh in Q1-2014. TWC’s customer relationships increased 1.27 per cent in Q1-2015 to 147.16 lakh from 145.32 lakh in Q1-2014.

     

    In Q1-2015, the number of consumers using TWC’s double or triple play increased by 64 basis points (up 1.05 per cent) to 61.45 per cent from 60.81 per cent.

     

    TWC’s overall revenue in Q1-2015 grew 2.06 percent to US$ 4662 million from US$ 4568 million in Q1-2014. Its VIVE revenue in Q1-2015 grew 1.96 per cent to US$ 4638 million (99.49 per cent of overall revenue) from US$ 4549 million (99.58 per cent of overall revenue) in Q1-2014.

     

    Video revenue fell 1.04 per cent in Q1-2015 to US$ 2469 million (53.23 per cent of VIVE revenue) from US 2495 million (54.85 per cent of VIVE revenue); Internet revenue grew 8.86 per cent to US$ 1696 million (36.57 per cent of VIVE revenue) in Q1-2015 from US$ 1558 million (34.25 per cent of VIVE revenue) in Q1-2014. Voice revenue in Q1-2015 fell 4.64 per cent to US$ 473 million (10.2 per cent of VIVE revenue) from US$ 496 million (10.9 per cent of VIVE revenue).

     

    TWC’s SARPU per customer relationship was US$ 105.06 in Q1-2015 or 0.68 per cent higher than the US$ 104.34 in Q1-2014.

     

    TWC’s video SARPU in Q1-2015 increased 2.1 per cent to US$ 76.07 from US$ 74.50 in Q1-2014; Internet SARPU increased 3.12 per cent to US$ 47.15 (61.98 per cent of video SARPU) in Q1-2015 from US$ 45.72 (61.37 per cent of SARPU) in Q1-2014 and Voice SARPU fell 16.4 per cent in Q1-2015 to US$ 28.13 from US$ 33.65 in Q4-2014.

     

    Charter Communications

     

    Charter Communications (Charter Com), an even smaller player than Comcast or TWC, reported 4.48 per cent growth in residential consumer relationships in Q1-2015 to 59.27 lakh from 56.73 lakh in Q1-2014. Video subscription base fell 1 per cent to 41.53 lakh (70.07 per cent of total relationships) from 41.95 lakh (73.95 per cent of total relationships) in Q1-2014; Internet subscription base grew in Q1-2015 by 8.23 per cent to 48.91 lakh (82.52 per cent of total relationships, addition of 3.23 lakh subscribers) from 45.91 lakh (79.66 per cent of total relationships) in Q1-2014; Voice subscribers grew 6.71 per cent in Q1-2015 to 24.81 lakh (59.74 per cent of total relationships) from 56.93 lakh (40.98 per cent of total relationships) in the corresponding year ago quarter.

     

    Overall revenue grew 7.27 per cent to US$ 2362 million in Q1-2015 from US$ 2202 million in Q1-2014. VIVE revenue in Q1-2015 grew 6.68 per cent to US$ 1980 million (83.83 per cent of overall revenue) from US$ 1856 million (84.29 per cent of overall revenue).

     

    Video revenue increased 3.58 per cent in Q1-2015 to US$ 1129 million (53.23 per cent of VIVE revenue) from US$ 1090 million (54.85 per cent of VIVE revenue) in Q1-2014; Internet revenue increased 16.4 per cent to US$ 717 million (36.21 per cent of VIVE revenue) in Q1-2015 from US$ 616 million (33.19 per cent of VIVE revenue) in Q1-2014. Voice revenue in Q1-2015 fell 10.67 per cent to US$ 134 million (6.77 per cent of VIVE revenue) from US$ 150 million (8.08 per cent of VIVE revenue) in Q1-2014.

     

    Charter Comm’s SARPU in Q1-2015 increased 2.11 per cent to US$ 111.35 from US$ 109.05 in Q1-2014. Video SARPU increased 4.63 per cent to US$ 90.62 in Q1-2015 from US$ 86.61 in the corresponding year ago quarter; Internet SARPU in Q1-2015 increased 7.54 per cent to US$ 48.87 (53.92 per cent of video SARPU) from US$ 45.44 (52.46 per cent of video SARPU) in Q1-2014; Voice SARPU fell 16.28 per cent in Q1-2015 to US$ 18 from US$ 21.51 in Q1-2014.

     

    Let us see what the richest Indian does through Reliance Jio Media, for this is probably the only group/entity that has the deep pockets to really offer a shimmer of comparison with the media giants in the US.

     

    Can we truly compare Cable television internet in India with the industry in the US? No way!

  • “India will be a huge broadband market over the next 3 years:” Rajiv Kapur

    “India will be a huge broadband market over the next 3 years:” Rajiv Kapur

    MUMBAI: The Indian Cable TV sector has a gargantuan task at hand. Not only does it have to work towards converting analogue cable TV homes to digital, but it also needs to work towards connecting India with high-speed broadband pipes.

     

    Multi system operators (MSOs) are now working towards strengthening their broadband services. While Hathway Cable & Datacom was the first to launch a 50 mbps broadband service on its Docsis 3.0 ultra high speed network in 2013, Siti Cable and Den Networks were quick to follow suit in 2014. Not only this, several cooperatives that mushroomed post the digitization announcement, are also looking at offering more broadband services. And all this, to improve business as well as their average revenue per user (ARPU).

     

    So are MSOs in India taking the right approach to build a broadband base in the country? Broadcom India managing director Rajiv Kapur tells Indiantelevision.com, “I applaud the MSOs in the country for what they are doing. They are taking the right approach. If anything, they should do more of it.”

     

    The satellite versus cable versus IPTV is probably the biggest war in the broadcast universe, where three different ways of delivering live TV compete with each other. “India is at a very nascent stage for IPTV, and that brings us to the satellite versus cable TV war. Like in any other market, both will co-exist with their own unique offerings. Both have existed with a large enough pie of their own and both bring something unique to the table,” opines Kapur.

     

    Kapur believes that a reason why cable benefits over satellite is because it can provide a two way service. “While one way service is very limited, two way services are way more powerful in customizing things to make them more entertaining, or in gaming context more interactive. Taking a cue from what has happened in the rest of the world, I foresee that the sheer desire to remain competitive against satellite will again lead cable to bring broadband more aggressively in Indian cable market. The market itself isn’t exactly demanding it, so there has to be a little bit of a push to create the demand,” he adds.

     

    Since Indian subscribers are currently not aware of the advantages of a two way pipe, cable operators will need to start making creative use of the pipe that gives two way cable services, which enhances one’s TV watching experience and not just leave it as a pipe. “Even if it is left as a pipe, there are still some benefits for cable operators because the ARPU will still be way higher,” Kapur informs.

     

    Broadband will not only benefit cable operators, but also subscribers as there will be less capital expenditures (CAPEX) and a lower total bill, if they get the services from one operator. “So everyone benefits and this will happen whether it’s a sheer data pipe or there are services in the data pipe, which embellishes TV watching experience,” says Kapur.

     

    According to him, one needs to be a little more patient with broadband as India is going through the basic steps of digitization. “As a country, barely have we been able to figure out how to get such a large footprint of analogue converted to digital. It is a very large market and that makes it that much more difficult. One needs to keep in mind that business relations between broadcasters, MSOs and LCOs are still settling down,” points out Kapur.

     

    The country definitely needs a broadband push and now. Talking about how it will happen, Kapur suggests two types of push mechanism. “The first push is much easier and has already started, which is offering a higher bandwidth speed at aggressive pricing. This kind of push takes a progressive operator to initiate it and we have seen it happening. The second level of push is TV embellishing two way service. If you fast forward into 2016, there will be at least one progressive like-minded large cable operator who will begin showcasing interactive services that others will either be forced to follow or would want to follow,” he suggests.

     

    Talking about the right pricing for broadband, Kapur says that the sweet spot of bandwidth and price is between Rs 800 – 1000. “There is always a package, which is above it and there is a package below it. What will happen with time is that higher speeds will come at the same price. This is the beauty of a competitive market. In a year from now, at least a few operators will start aggressive broadband packages in the market. The side effects of this on other operators starting the same, will take another year or two. So in the next two-three years, India will be a much larger broadband market than it is today,” feels Kapur.

     

    Delay in Digitization

     

    Kapur believes that even if the country sees a large percentage of digitized homes and not 100 per cent, is still a big step forward. “The only benefit of 100 per cent digitization is that one can do an analogue shut off,” he says.

     

    Citing the positives of the delay of digitization, Kapur says, “The sheer magnitude of what needs to be done is very large. The delay gives time and opportunity to MSOs, LCOs and broadcasters to sort out their complex relations and their businesses.”

     

    The pressure to complete seeding of set top boxes (STBs) on time in phase I and II saw many MSOs compromising with the STB quality. “If we have to deploy 50-100 million boxes, it will be a shame to do it without keeping quality in mind. This country shouldn’t waste money in replacing boxes. So there is a big positive in the delay as now the quality matrix of what needs to be looked in hardware procurement will be left uncompromised,” he adds.

     

    Pay TV channel revenues post digitization

     

    Currently there is fear in the masses that prices of pay TV channels post digitization will go up. Kapur feels that while there is an element of truth in that, it is only because in the analogue regime, people were not paying for what they were viewing. “The second television was not being paid for and people were slicing the cable and taking feeds. So in the bigger picture, prices will go up just because of that.”

     

    Citing examples from the telecom sector, where high competition and usage led to reduction of prices, Kapur suggests that hyper competition will force price control even in the cable TV sector. “More services will come, which if taken by subscribers, will increase the ARPU for operators,” he opines.

     

    In satellite, DTH players have existed since over 10 years, however the country witnessed hyper competition amongst players only in 2008-2009. As the DTH market enters its early stage of maturity, more services are being considered and offered to consumers. “All this took a decade. Cable will not take that long because the market is established due to DTH, but it still needs to go through it,” informs Kapur.

  • TRAI asks MSOs to devise rational channel rates for phase III

    TRAI asks MSOs to devise rational channel rates for phase III

    MUMBAI: Close to 61 multi system operators (MSOs) have approached the broadcaster for signing of interconnect agreements. The statistics were revealed at the eighth task force meeting by the Telecom Regulatory Authority of India (TRAI) advisor Sunil Kumar Singhal.

     

    Of these, according to the report received by Singhal, while the broadcasters have given their replies to the MSOs, the memorandum of understanding (MoU) is yet to be signed. The TRAI through its meetings with the MSOs and broadcasters, has identified four core issues relating to interconnect agreements. These are:

     

    1. While the MSOs are expressing interest for getting signals from broadcasters, they are being asked for more information, which is taking time. “Now with the intervention of TRAI, broadcasters have formalized their formats and have placed them on their websites so that all MSOs can submit requests at one go and the agreement signed,” informed Singhal.

     

    2. The distributors of several broadcasters in a state are also MSOs and that has led to conflict of interest with the MSOs. “We have been able to address this by seeking the details of the core team of the broadcasters to be approached for getting the signals and the broadcasters have provided such details also on their websites,” he said.

     

    3. The third point was related to pending dispute between MSOs in DAS areas which are both old as well as new. “These disputes need to be resolved mutually as TRAI would not intervene in such disputes,” he opined.

     

    4. There are differences between MSOs and broadcasters on the rate of channels.   “The larger MSOs are in negotiations with broadcasters to finalise the prices and it is indicated that they will be in a position to finalise them by mid June,” he said.

     

    Meanwhile, TRAI has asked the MSOs to devise means to have rational rates for phase III areas, as the rates for phase I and II cannot be workable in the remaining phases.

     

    The TRAI advisor also informed the task force meeting that there was confusion between both MSOs and broadcasters which related to the modus operandi for entering into agreements during the transition period.  The TRAI advisor said that the MSOs and broadcasters were business entities who should know how to communicate with each other in order to expedite and facilitate their business interests. The TRAI has asked the stakeholders to not repeat the mistakes of phase I and II by deploying pre-activated STBs.

     

    The representative of the MSOs, during the meeting said that whatever be the rate declared by broadcasters, TRAI should come out with a non-discriminative clause which should not push packages but allow the channels to be on a-la-carte basis. “We have been insisting on a-la-carte and not bundling of channels and any delay in the implementation of DAS will result in losses to both MSOs and broadcasters,” informed the TRAI advisor.

     

    According to a MSO representative, the packaging of channels should be monitored by TRAI. “The LCOs should be trained to spread DAS amongst the consumers as they are close to the consumers and can speedup this process,” opined the MSO representative.

     

    Information and Broadcasting Ministry (I&B) additional secretary JS Mathur, who was also chairing the meeting said that the publicity campaign for the cutoff date for phase III should start now.

     

    According to Siti Cable Network’s Anil Malhotra, while the target rate of seeding set top boxes (STBs) requires to be around 2 to 3 lakh per day, the present rate of seeding is about 20-30 thousand boxes which is way short and logistic support has to be planned out in order to step-up the pace of seeding.

     

    During the meeting, a representative from BIS raised the issue of hacking of STBs and said that a request has been received from some broadcasters to strengthen the BIS Standard of STBs.

  • FY-2015: Indian cable industry – long haul work in progress

    FY-2015: Indian cable industry – long haul work in progress

    BENGALURU: The cable industry in India has made a remarkable amount of progress in implementing DAS in phase I and phase II considering the weak balance sheets that most players carry, but all still have a long way to go before they actually start making profits. However, the promise of addressability, greater transparency and higher average revenue per user (ARPU) is yet to be realized by the cable industry.

    Current Status

    As on 31 December, 2014, 138 multi system operators (MSOs) have been granted permanent registration (for 10 years) for providing Cable TV services through Digital Addressable Systems (DAS) by the Ministry of Information and Broadcasting (MIB).

    DAS roll out in phases III and IV is expected to be more challenging on account of larger geographical spread, poor balance sheets of the cable industry players and low potential for ARPUs from the conventional cable carriage and subscription business. Implementation of phases I and II was challenging, tiered packages have yet to be offered to the viewer and billing is still work in progress as MSOs still face resistance from local cable operators (LCOs) in giving up ownership of customers in some cases.

    Cable players in India have started giving broadband services a lot of serious attention in fiscal 2015. A few players such as the medium sized MSO Atria Convergence Technologies Private Limited (ACT) had actually changed strategy since 2012 and started focusing more on broadband services, without losing focus on its MSO operations. Despite being a regional player, ACT is the second largest private wired broadband player in the country with a market share of 3.24 per cent and over 6.11 lakh broadband subscribers as on 31 December, 2104, just after the behemoth Airtel (15 lakh subscribers, 7.95 per cent market share). ACT had 4.25 lakh (includes numbers of Beam Telecom Limited which was merged with ACT on 1 April, 2014) broadband customers as on 31 December, 2013 and hence, its broadband subscriber base has grown by 43.76 per cent in the 12 months until 31 December, 2014. As on April 30, 2015, Atria had a wired broadband subscriber base of 6.8 lakh.

    Public sector companies such as BSNL (the largest wired internet services player in India with 69.83 per cent market share, 1.317 crore subscribers) and MTNL (6.02 per cent market share and 11.3 lakh subscribers) are of course bigger players in the wired broadband services than ACT. Among the major MSOs in the country, Indusind Media & Communications Limited is probably the only player whose broadband subscriber base has not grown much until 31 December, 2014, during which the company reported 29,709 internet subscribers (including 3539 narrowband subscribers) as compared to the 28,337 subscribers (including 4750 narrowband subscribers) as on 31 December, 2013.

    Internet services has turned into a heavy capex exercise for many MSOs where the last mile is owned by LCOs mainly because an MSO may not be allowed access to the customer for sales and service by the LCO, and/or the quality of the cable may not be at par.

    This report takes four MSOs – Den Networks Limited (Den), Siti Cable Network Limited (Siti), Hathway Cable and Datacom Limited (Hathway) and Ortel Communications Limited (Ortel), financials as a sample size.

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

    Let’s look at FY-2015 numbers reported by these companies:

    (Please refer to Fig 1 below) The sum total of operating revenue (OR) for these companies in FY-2015 grew 9.94 per cent to Rs 3213.27 crore from Rs 2922.86 crore in the previous year. Den, the company with the highest operating revenue numbers and subscriber base amongst the three, showed the lowest operating revenue growth of just 1.16 per cent to Rs 1129.64 crore in FY-2015 from Rs 1116.69 per cent in FY-2014. Siti showed the highest operating revenue growth at 29.93 per cent in FY-2015 at Rs 905.93 crore from Rs 627.24 crore in FY-2014. The minnow – Ortel’s operating revenue grew 20.46 per cent to Rs 158.79 crore in FY-2015 from Rs 128.50 crore in the previous fiscal, while that of the second largest player among the four, Hathway grew 4.33 per cent to Rs 1022.91 crore in the current year from Rs 980.43 crore in FY-2014.

    Cable Subscription Numbers

    Most MSOs’ revenue model is subscription, carriage plus advertising charges for cable services and broadband. Set- top-box (STB) seeding is a one time periodic revenue (maybe once every five years?) for the companies that could later erode the profits – considering the depreciation and the interest cost on the STB subsidy that many MSOs offer to subscribers.

    In its FY-2014 annual report, Den said it serves an estimated 1.3 crore households of which over 64 lakh had opted for digital subscription as on 31 March, 2014. The company has a digital subscriber base of 70 lakh (53.85 per cent of total number of 1.3 crore subscribers) as on 31 March, 2015, of which 51 lakh are in phases I and II of DAS, and Den continues to bill about 80 per cent of these subscribers.

    On the other hand, Siti has reported 1.05 crore subscribers and a digital subscriber base of 53.8 lakh (51.24 per cent of total subscribers) for FY-2015, a conversion of 13.8 lakh subscribers to digital over a 12 month period, from the 40 lakh digital subscribers it had reported at the end of FY-2014. As a matter of fact, in Q4-2015, the company deployed 5.3 lakh STBs, and a big portion of its seeding had taken place then.

    Hathway has a subscriber base of 1.18 crore of which 85 lakh (72 per cent of total subscribers) are digital and 65 lakh are paying subscribers. This makes it the biggest player in the country in terms of digital subscribers.

    Ortel reported a subscriber base of 4.72 lakh in FY-2015 as compared to 4.61 lakh in FY-2014. The company reports 1.07 lakh (22.73 per cent of total subscribers) digital subscribers as on 31 March, 2015.

    Ortel CEO and President Bibhu Prasad Rath said, “Ortel Communications’ direct-to-consumer offering with full control over the ‘last mile’ network has enabled us to emerge as a dominant regional player in the cable TV and broadband business. With increasing penetration in our core and emerging markets along with the inorganic LCO buy out strategy, we believe we are well-positioned to achieve our immediate target of approximately 1 million RGUs by the end of FY-2017.”

    Subscription income for all the four mentioned companies has grown, with Siti showing the highest jump at 56.41 per cent – from Rs 339.5 crore in FY-2014 to Rs 531 crore in FY-2015. (Please refer to figure 2 below) Ortel’s subscription revenue grew the least 4.36 per cent – from Rs 75.7 crore in the previous year to Rs 79 crore in FY-2015.

    Siti Cable executive director and CEO V D Wadhwa said, “Our focus on monetization of existing business in phase I and II cities in FY-2015, led to a strong subscription revenue growth of 57 per cent y-o-y and operating EBITDA margin expansion. Siti Cable is engaged in proactive seeding and well placed to benefit from the ongoing digitization process.”

    Internet Services

    As mentioned above, offering internet service is a part of many of the major MSOs’ business and revenue expansion strategy. Internet services, and more so broadband services of all the four companies mentioned in this report have in general shown higher revenue growth than their cable services revenues.

    Den commenced its broadband services in Q1-2015 and has garnered 23,000 subscribers since then. Den CEO Pradeep Parameswaram said, ”We are laying the foundations of building a powerful consumer franchisee in broadband, cable television and television shopping. Significant investments are being made to bring disruptive consumer offerings to the market. We are augmenting out historical strengths in cable operations with high quality talent in all functions.”

    Siti Cable’s broadband revenue in FY-2015 grew 53.3 per cent to Rs 26.5 crore from Rs 17 crore in FY-2015. The company reported a broadband subscriber base of 70,100 in FY-2015 as compared to 54,000 in FY-2014.

    “We are looking to expand our broadband presence on Docsis technology in our endeavour to diversify our revenue stream and provide the consumer with a compelling experience,” added Wadhwa.

    Hathway’s broadband revenue jumped 47 per cent to Rs 247.5 crore in FY-2015. With the addition of Delhi and Central Mumbai to Docsis 3.0 and upgradation of Surat Network, Hathway is the only MSO to offer high speed 50 mbps broadband services in Delhi, Mumbai, Pune, Bangalore, Hyderabad and Surat.

    Ortel’s broadband revenue increased five per cent to Rs 28.9 crore in FY-2015 from Rs 27.5 crore in FY-2014. The company’s broadband subscribers increased 7.52 per cent in FY-2015 to 58,519 from 54,427 in the previous year.

    “We anticipate further improvement in margins going forward as a result of deeper penetration in the Cable business along with our continued focus on the high-margin Broadband segment,” said Ortel’s Rath.

    EBIDTA

    The financials of three of the four sample players showed an increase in operating profits (simple EBIDTA including other income). (Please refer to Fig 3 below) Den EBIDTA dropped to half at Rs 180.23 crore in FY-2015 from the Rs 360.41 crore in FY-2014. With an increase of 94.17 per cent, Siti’s FY-2015 EBIDTA almost doubled to Rs 168.43 crore from Rs 86.74 crore in FY-2014. Hathway’s EBIDTA in FY-2015 increased 16.13 per cent to Rs 560.9 crore from Rs 483 crore in the previous year. Ortel’s EBIDTA increasd 44.6 per cent to Rs 59.05 crore from Rs 40.84 crore in the previous fiscal.

    Profit/Loss

    (Please refer to figure 4 below) Two of the three large players in this sample – Siti Cable and Hatway have reported higher loss in FY-2015, while Den’s results have turned to the red in FY-2015 from the black in FY-2014. Ortel, which was listed a few months ago on the bourses, is the only one among the four that has reported a small profit of Rs 5.90 crore (3.62 per cent margin) in the current year as compared to a loss of Rs 13.79 crore in the previous year.

    “We have seen the positive results on subscription revenues and collections in Q4 of the current year. The profitability has been impacted because of the new business initiatives of the company including broadband, TV Shop and football as we build Den for future,” said Den’s Parameswaran.

    Last year, Den became the owner of the Hero Indian Super League’s Delhi Team – Delhi Dynamos FC. With the introduction of Delhi Dynamos FC, the company aims to become the default destination for entertainment, information and interactivity for the Indian family.

    End Points

    As the value chain shifts to addressable systems and tiering, growth in cable TV ARPUs will be driven by customized channel packs, premium content channels, HD channels and other value added services. It will not be easy going because cable industry players have to contend with DTH players who have strong balance sheets and are backed by deep pockets – be it Airtel, Tata Sky, Videocon d2h, Sun Direct or Reliance.

    The cable industry players need to sort out the ambiguity about revenue shares between the MSOs and LCOs and between the MSOs and broadcasters. The one positive is that larger MSOs appeared to have stopped poaching LCOs from each other, at least in phases I and II areas. “It’s not because the industry has turned goodie-goodie all of a sudden. Generally, it is just not worth the cost to pay to an LCO to switch loyalties in a phase I and II areas, or any area where digitsation has happened in a major way,” reveals an MSO on condition on anonymity. That attitude has to change for the common good of the industry.

    An industry source cites instances of LCOs still trying to fudge numbers despite deployment of STBs, with the LCOs claiming that a customer has relocated without returning the STB, or fudging with the number of STBs received. On the other hand, some LCOs need help in developing a robust last mile infrastructure.

    The cable industry has to leverage whatever advantages it has – this could be providing local information and relevant local news, local advertisements, etc., on MSOs’ own channels and services.

    A key differentiator could be the service quality and the personal connect that many operators have developed with consumers. Industry players need to change the impression they create right from ground up. This includes approach to customers for bill collection, to how each individual is perceived by anyone and everyone in the value chain, and more so banks and financers. Big as well as multiple middle sized players have already brought in a degree of professionalism across many levels and hence have relatively easier access to funding.

    Long term common purpose unity is what the cable industry needs desperately. Each player has to mature, has to understand and accept that one cannot do without the other. The road is still long and arduous.

  • Siti Cable celebrates International Day of Yoga

    Siti Cable celebrates International Day of Yoga

    MUMBAI: To ‘Embrace a Healthier Lifestyle’, and promote the age old practice of Yoga, which is being endorsed by Prime Minister Narendra Modi, Siti Cable Network, an Essel Group Company celebrated the International Day of Yoga on 21 June by organising Yoga sessions concurrently at 70+ cities across India. The yoga sessions at various locations saw participation from more than 50,000 people, 9000 Business Partners and 1500 SITI Employees.

     

    Each event that happened at various locations was unique in its own way. To name a few; In Varanasi 500 people performed yoga amid the river Ganga on 25 House boats & 15 steamers, in Hisar, Siti in collaboration with Patanjali organized a yoga session for more than 3,000 people, likewise in Hyderabad & Bangalore the sessions took place under the guidance of renowned Yoga Gurus. In Delhi, Siti’s yoga initiative found huge support from the RSS with more than 800 of its Shakha members taking part in the Siti Yoga drive.

     

    Siti Cable executive director and CEO VD Wadhwa said, “The Yoga sessions, which took place on account of the International Day of Yoga were well received across India and I would like to extend my vote of thanks to the participants for making this initiative a grand success. I hope this drive endures and does not fade with time.

     

    The entire event was covered by Siti’s 100+ local channels covering 130+ Cities reaching out to 40 million SITI Cable viewers. For Siti Cable Yoga Day does not end here, it intends to inculcate Yoga into day to day lives of its associates and shall continue doing so through regular Yoga centric programming content on its Local channels.”

  • Siti Cable gears up for World Yoga Day

    Siti Cable gears up for World Yoga Day

    MUMBAI: Siti Cable Network, an Essel Group Company plans to celebrate the International Day of Yoga on 21 June by organising Yoga sessions, concurrently at various venues all across India involving 1500 employees, 9000 business partners and reaching out to 40 million viewers.

     

    The previous year, Prime Minister Narendra Modi, addressed the United Nations General Assembly to get this day recognised as the International Day of Yoga. Acknowledging the effects of Yoga on an individual, he says one needs to make changes to contemporary lifestyle by making Yoga a way of life. He says, “Yoga embodies unity of mind and body; thought and action; restraint and fulfillment; harmony between man and nature.” He adds, “Yoga is an invaluable gift of our ancient tradition. It is not about exercise but to discover the sense of oneness with yourself, the world and the nature.”

     

    Siti Cable Network with an aim to ‘Embrace a Healthier Lifestyle’ has scheduled Yoga sessions by professionals on the International Day of Yoga in 70+ cities across India, with major events taking place in 25 cities. Siti Cable executive director and CEO VD Wadhwa says, “Our fundamental nature is usually overshadowed by the activity of the mind, and Yoga keeps the mind peaceful. It is a way of freedom and by practicing it continually we can free ourselves from distress and anxiety. It promotes spiritual, mental and physical wellbeing, and should be practiced by all.”

     

    The World Yoga Day celebrations will be covered by Siti’s 100+ local channels across 130+ Cities. Siti Cable Network aims to promote and support the noble initiative taken by Prime Minister Narendra Modi by creating social awareness about this age old practice amongst its stakeholders; employees, business partners and subscribers.

  • Zee Group promotes Anil Jain as Siti Cable CFO

    Zee Group promotes Anil Jain as Siti Cable CFO

    MUMBAI: Even as Siti Cable CFO Sanjay Goyal put in his papers at the company, Zee Group has promoted Taj Television senior vice president finance Anil Jain to step into his shoes as CFO.

    As was reported earlier today by Indiantelevision.com, Zee Group was looking to internally promote one of its executives from its group companies to fill in the position left vacant at Siti Cable. 

    Jain started his new role from today (9 June, 2015) and will be reporting to Siti Cable CEO VD Wadhwa. 

    Confirming the development to Indaintelevision.com, jain says, “In the past with media pro, I was taking care of the distribution aspect and now I will endeavor more in the fianance part.”

    He further adds, “I am very excited to join Siti Cable as CFO and looking forward to working closely with the senior management and serve the company with my finance expertise.”

    Prior to the new role as CFO, Jain was with Media Pro Enterprise India Private Limited for four years (now Taj Television). Before that he headed the finance and accounts at Zee Turner Limited for more than three years. He also served one year stint with Neo Sports as GM – affiliate accounts. He started his career with Zee Telefilms as an internal auditor for two years.

  • TRAI asks MSOs, b’casters to sign MoU on interconnect agreements in phase III

    TRAI asks MSOs, b’casters to sign MoU on interconnect agreements in phase III

    MUMBAI: The Telecom Regulatory Authority of India (TRAI) has given time till 30 April, 2015 to both broadcasters and multi system operators (MSOs) to enter into a memorandum of understanding (MoU) with regards to interconnect agreements in phase III of digital addressable system (DAS) areas.  

     

    During the seventh task force meeting for successful completion of phase III and IV of digitization, a representative from TRAI informed that in case the broadcasters and MSOs fail to reach any agreement, the Authority will intervene in the matter, as per regulations. “While broadcasters were asked to give report every fortnight, the same has not started coming,” said the TRAI representative.  

     

    The representative also mentioned that in the transition period both analogue as well as digital signals can be provided by the MSOs in phase III areas. “As per the regulations digital signal can be provided in areas undergoing transition without waiting for the cutoff date,” he added.

     

    The meeting was convened under the chairmanship of Information and Broadcasting Ministry additional secretary JS Mathur, who said, “While there has been some progress on the issue of interconnect agreements for phase III areas but there are still many areas which need to be addressed by broadcasters.”

     

    During the meeting, an IndusInd Media and Communication Limited (IMCL) representative said that while they had sent interconnect requests to all broadcasters, as per the TRAI directive, they had received response from only one broadcaster, while Siti Cable was still awaiting a response from all. A Siti Cable representative said, “Broadcasters are filing cases of piracy against MSOs if they start providing digital signal in the phase III areas.”

     

    MSOs pointed out that the situation is critical and TRAI must take immediate necessary action to resolve the issue. MSOs also want the entertainment tax, levied by State Governments, rationalised.

     

    Representatives of broadcasters said that they would approach TRAI for clarification on the interconnect agreements to be signed for the transition period. “No such issues of interconnect agreements were raised during phase I and phase II of digitisation and the set top boxes (STBs) were still seeded. Why are these issues being raised now?” questioned broadcasters.

     

    Broadcasters also raised concerns on the HITS (Headends In The Sky) platform of delivery with regard to addressability although it is mentioned that it is addressable from the day one. Broadcasters also opined that DAS regulations should apply from the date MSOs take digital signal.

     

    According to Mathur, consumers have the right to know what they have to pay for the digital signal and so, it is imperative that broadcasters and MSOs work out agreements between them without further loss of time. He added, “Channel package rates have to be in public domain. Broadcasters must now finalise all issues with MSOs so as to have a lead time of implementation.”

     

    While the universe for phase I and II was extremely limited, phase III has to cover all the urban areas of the country. This would thus require exhaustive planning along with suitable investments. “Both broadcasters and MSOs must now finalise their agreements and inform TRAI within the stipulated time period of 30 April,” said Mathur, while suggesting that TRAI should convene a meeting soon after the time period it has given for finalising the action plan for smooth and timely transition.

     

    Mathur also expressed dissatisfaction over the public awareness campaign for digitisation in phase III areas carried out by the stakeholders so far. He asked all stakeholders and particularly the broadcasters to start the publicity campaign forthwith.

     

    While the Ministry is still awaiting data on carriage fee and subscription revenue from both the Indian Broadcasting Foundation (IBF) and the News Broadcasters Association (NBA), an NBA representative assured that it will be sent before the next meeting.

     

    Mathur also enquired about the initiatives being taken by MSOs for using indigenously manufactured STBs. Responding to this, an MSO representatives said that the dialogue with indigenous STB manufacturers was on.

     

    Consumer Electronics and Appliances Manufacturers Association (CEAMA) representative informed that they had fruitful discussions with some MSOs in which they made some financing offers to MSOs for the supply of STBs.

     

    Representative of CEAMA further added that they were now facing a major competition from the suppliers of ASEAN countries since the government, as per the ASEAN agreement signed in 2009, has reduced the import duty on STBs imported from ASEAN countries to two per cent only against 10 per cent from other countries. He said, “MSOs may neglect local STB manufacturers and start importing from ASEAN countries, but this will be against ‘Make in India’ initiative of the Government.”

     

    Meanwhile a CEAMA representative requested the I&B Ministry to look into the issue, while informing that they were also in the process of writing to the Ministry of Commerce about this development. In order to know the use of indigenously manufactured STBs, Mathur directed that the information on utilisation of domestically manufactured STBs may also be sought from all MSOs along with the seeding plans.

  • Four MSOs levied penalty for non-payment of entertainment tax

    Four MSOs levied penalty for non-payment of entertainment tax

    NEW DELHI: Even as Siti Cable ‘vehemently’ denied any allegation of tax evasion as alleged by the Delhi Government, similar notices were issued to three other major multi-system operators (MSOs) for paying Rs 243.77 crore as dues, due to a default in payment of entertainment tax.

     

    While there was no official word from either IndusInd Media and Communications or Hathway Cable and Datacom, a source from Den Networks informed Indiantelevision.com that the action by the Delhi Government was a violation of a commitment given by it to the Delhi High Court that no coercive action would be taken during the pendency of a case challenging the levy of entertainment tax and vires of the Delhi Entertainment and Betting Tax Act 1996.

     

    The source also added that an appropriate reply would be given both to the Delhi Government and in the High Court, but said no notice had been received so far and the MSO had learnt about it only from a newspaper report.

     

    Siti Cable, which had received a similar notice for Rs 33.12 crore, had said in an official statement, that it had been depositing the entertainment tax regularly on the basis of collections. The MSO had “vehemently’ denied the allegation of tax evasion.

     

    The matter is pending vide its Writ Petition of 2014, Siti Cable had earlier said.

     

    According to reports, the charges levied on the four MSOs include a 100 per cent penalty and an interest on dues.

     

    The levy is for 2013-14 and 2014-15. Den Networks has to pay just over Rs 88.81 crore, while Hathway Cable and Datacom need to pay around Rs 59 crore, IndusInd Media and Communications has been asked to pay just under Rs 52 crore for two years.

     

    While noting that these MSOs need to file their tax every month, a Delhi Government source said that Den, Hathway and IndudsInd had between them around 2.6 million subscribers in the capital. 

  • Siti Cable denies fraud as Delhi govt levies penalty for entertainment tax evasion

    Siti Cable denies fraud as Delhi govt levies penalty for entertainment tax evasion

    NEW DELHI: While ‘vehemently’ denying any allegation of tax evasion, multi system operator (MSO) Siti Cable late on Tuesday evening said that in any case the matter was sub judice because it had challenged the levy of entertainment tax and vires of the Delhi Entertainment and Betting Tax Act 1996 in the Delhi High Court.

     

    Noting that it had been depositing the entertainment tax regularly on the basis of collections, Siti Cable also said in an official statement that “the company had not yet received any official communication/ notice about any such order being passed by the Entertainment Tax Department, Government of Delhi.”

     

    The matter is pending vide its Writ Petition of 2014, Siti Cable said. 

     

    The statement said, “The company has come to know from public sources regarding the alleged ex-parte order issued by the Delhi Government, directing Siti Cable Network Ltd. to deposit Rs 33.12 crore as outstanding entertainment tax including interest and penalty. In this context, the company vehemently denies the allegation of tax evasion and would like to clarify that it has been depositing the entertainment tax regularly on the basis of collections. It has already challenged the vires of the Delhi Entertainment and Betting Tax Act, 1996 vide its Writ Petition being No. 427 of 2014, which is subjudice before the Hon’ble Delhi High Court.”

     

    Earlier in the day, sources in the Delhi government revealed that Siti Cable Network, an Essel Group Company, with Subhash Chandra as its chairman of board of directors and CEO, had been directed to deposit Rs 33.12 crore as its outstanding entertainment tax for two years along with interest and penalty within 15 days, by 22 April.

     

    Sources said that the MSO had defaulted in payment of entertainment tax since April 2013.

     

    The company was learnt to have committed a serious illegal act of tax evasion by duping the government despite having collected the amount in the name of taxes from its innocent customers. 

     

    This company has been collecting entertainment tax from 5,36,616 customers at the rate of Rs 20 per month through local cable operators.

     

    In the financial year, 2013-14, Siti Cable was found to have collected around Rs 13 crore as entertainment tax from its customers but only deposited Rs 4.63 crore as entertainment tax for this financial year. The allegation therefore was that it had defaulted by not depositing the remaining Rs 8.32 crore, which should have been deposited on a monthly basis in the government exchequer.

     

    Taking cognizance of the fraud, the Delhi government levied a 100 per cent penalty of Rs 8.32 crore and an interest of Rs 3.06 crore under the relevant provisions of the Delhi Entertainments and Betting Tax Act 1996, sources said.

     

    The complete assessment including additional tax, penalty and interest for the financial year 2013-14 is Rs 19.71 crore.

     

    The Delhi Government alleged that the MSO had defaulted during the next financial year of 2014-15 as well. The government has assessed the tax, interest and penalty for 2014-15 at Rs 13.41 crore.