STB – Page 18

Kolkata to go completely digital from 28 December

MUMBAI: Kolkata‘s cable television will go completely digital from 28 December.

The Information and Broadcasting (I&B) ministry has cracked the whip for switching off of all analogue television signals in the West Bengal state capital by 27 December.

The multi-system operators (MSOs) will begin the process of switching off of analogue signals from 16 December. The second genre-wise switch off will be on 20, followed by 23 and finally 27 December when the Bengali language channels also go dark on analogue cable.

"The I&B ministry has said that from 16 December onwards till 27 December all the analogue channels should go off air and only digital should be activated (from 28 December)," Siti Cable Kolkata director Suresh Sethia told Indiantelevision.com.

Cable television networks in Mumbai and Delhi have already gone totally digital. According to a TAM survey, set-top boxes (STBs) required for digital reception have been deployed in 93 per cent of cable TV homes in Mumbai, 97 per cent in Delhi and 70 per centin Kolkata.

The I&B had mandated compulsory switch to digital delivery of cable television in the four metros of Mumbai, Delhi, Kolkata and Chennai from 1 November. The ministry did not push for switching off of analogue signals along with Mumbai and Delhi as a large number of homes in Kolkata were still on analogue then. The situation has now changed. Over 75 per cent of cable TV homes in Kolkata now have STBs installed.

Sethia said almost 85 per cent of Siti Cable‘s subscribers now have STBs installed.

Manthan Broadband services, a regional multi-system operator, is also pushing for digitisation. "We have received a communication from the I&B ministry and will be switching off analogue signals completely by the deadline specified. We have also worked out a lower-priced package for those subscribers who hold a BPL (below poverty line) card as desired by the West Bengal state government," said Manthan business head Samrat Sen.

Chennai is the only city still to go digital as the Madras High Court is hearing a petition filed by associations of cable operators. The court has scheduled a hearing in the last week of this month.

December 15, 2012

Video providers in US to launch STBs meeting energy efficiency norms

MUMBAI: Fifteen industry-leading multichannel video providers and device manufacturers that deliver service to more than 90 million American households are launching an unprecedented Set-Top Box Energy Conservation Agreement that will result in annual residential electricity savings of $1.5 billion or more as the commitment is fully realised, the Consumer Electronics Association (CEA) and National Cable & Telecommunications Association (NCTA) announced.

Participating companies include providers (listed according to number of customers) Comcast, DirecTV, Dish Network, Time Warner Cable, Cox, Verizon, Charter, AT&T, Cablevision, Bright House Networks and CenturyLink, and manufacturers Cisco, Motorola, EchoStar Technologies and Arris. Through the voluntary, five-year Set-Top Box Energy Conservation Agreement, which goes into effect 1 January 2013, these companies commit to the following:

At least 90 percent of all new set-top boxes purchased and deployed after 2013 will meet the U.S. Environmental Protection Agency (EPA) ENERGY STAR 3.0 efficiency levels. Based on market projections for set-top box deployments, this will result in residential electricity savings of $1.5 billion annually, as the agreement is fully realized.
For immediate residential electricity savings, “light sleep” capabilities will be downloaded by cable operators to more than 10 million digital video recorders (DVRs) that are already in homes. In 2013, telco providers will offer light sleep capabilities, and satellite providers will include an “automatic power down” feature in 90 percent of set-top-boxes purchased and deployed.
Energy efficient whole-home DVR solutions will be available as an alternative to multiple in-home DVRs for subscribers of satellite and some telco providers beginning in 2013.
“Deep sleep” functionality in next generation cable set-top boxes will be field tested and deployed if successful.

“Providing American consumers with innovative services that deliver great video content and reduce in-home energy costs is win-win for customers and participating companies,” said Michael Powell, NCTA President and CEO. “Multichannel video providers and device manufacturers are proud to participate in this unprecedented initiative, and we will continue to pursue even more ways to reduce the overall energy footprint of our services.”

According to the EPA, which administers the Energy Star program, set-top boxes that are Energy Star-qualified are, on average, 45 percent more efficient than conventional models. The new energy conservation initiative will produce more energy savings overall, and five years earlier than originally anticipated by the U.S. Department of Energy (DOE) in its most recent review of set-top box energy conservation issues. Prior to this agreement, 2018 was the earliest date that any DOE set-top box standards would have been implemented.

“Our industry today commits to a comprehensive initiative that will lead the way to energy savings for consumers in this popular and rapidly evolving product category,” said CEA President and CEO Gary Shapiro. “The Set-Top Box Energy Conservation Agreement will protect innovation and consumer choice while reducing energy use and saving money.”

Companies involved in the new Set-Top Box Energy Conservation Agreement will meet regularly to review and update energy efficiency measures, and to host ongoing discussions with the DOE, the EPA and other interested government agencies and stakeholders on new technologies and equipment. To create accountability and support transparency, the agreement’s terms include detailed processes for verification of set-top box performance in the field; annual public reporting on energy efficiency improvements; and posting of product power consumption information by each company for its customers.

The $1.5 billion estimate of Energy Star 3.0 (ESv3) savings takes into account the replacement of DVR and non-DVR set-top boxes with set-top boxes that meet ESv3 energy efficiency levels. It also accounts for the continued trend by consumers to use more DVRs. The estimate adopts the most recent projections from energy advocates of consumer demand for more DVRs in a “business as usual” trend and then assumes that the projected demand is satisfied with DVRs meeting ESv3 efficiency levels.

December 8, 2012

Vedanta-owned Sterlite bags order to provide STBs to Arasu Cable

MUMBAI: Pune-based Sterlite Technologies has got the order for supplying two lakh set-top boxes to Tamil Nadu government-owned Arasu Cable TV Corporation Limited (ACTCL), according to a top executive.

Sterlite Technologies, a leading global provider of transmission solutions for the power and telecom industries, is part of the Vedanta Group which has interests in aluminium, copper, zinc, lead, silver, iron ore, oil and gas and power.

ACTCL had floated a global tender for the process of procuring STBs which also saw the participation of Wipro and Shaf Broadcast among others.
The multi-system operator (MSO), which is yet to receive a DAS licence, needs one million STBs for digitisation.

"Sterlite Technologies has got the contract for supplying two lakh boxes. We had advertised for one million boxes," ACTCL managing director D Vivekanandan confirmed to Indiantelevision.com.

Vivekanandan said that the decision whether to order more boxes from Sterlite or some other company would be taken depending upon the speed of supply.

The state-run Arasu is expecting to receive the DAS licence, for which it had applied on 5 July, soon. "It is only about time that we will get the licence. We hope to get it soon," Vivekanandan affirmed.

However, the I&B ministry is mulling whether state-owned cable networks should be given licence to operate.

Vivekanandan, though, has a different take on the matter. "As of now there is no rule to bar Arasu from having a licence," he said.

Arasu, which has a firm grip on cable distribution across Tamil Nadu, had extended its cable TV services to the metro on 20 October. ACTCL had said that it would offer 200 channels to the viewers in Chennai.

The cable TV corporation had also placed ads in in the run up to digitisation urging people to register for STBs through an advance payment of Rs 500 per STB.

"We have received advance payments for 30,000 boxes while LCOs have requested for about nine lakh boxes. The response has been good," Vivekanandan noted.

Earlier, Arasu Cable had floated a tender for providing digital head-ends, STBs, encryption solutions and subscriber management system (SMS) but cancelled it because it found the costs too high.

As per data provided by the Information and Broadcasting ministry, the digital cable penetration in Chennai with 0.7 million subscribes stands at 63 per cent.

The implementation of digitisation has been put on hold due to a stay order from Madras High Court on a petition filed by cable operators. The case is pending in the Court and will next come up for hearing on 28 December.

November 30, 2012

‘Digitisation will throw open acquisition opportunities’ : IndusInd Media and Communications chief executive officer Nagesh Chhabria

T he Hindujas have started the first round of cable TV digitisation in the three metro cities of Mumbai, Delhi and Kolkata. The second phase will open up 15 more cities where IndusInd Media and Communications Ltd (IMCL), the cable TV company they own, operates. Aggression is being planned to take on 14 more cities through acquisitions, joint ventures or direct entries.

The ambitious target set is deployment of four million digital set-top boxes (STBs) on top of the 1.5 million IMCL is expecting to achieve in the first phase of digitisation. The company is also planning to own one million last mile connections in two years, up from its current base of 300,000.

IMCL, which operates its cable TV business under the Incablenet brand, will need Rs 6 billion in the new phase that will see 38 cities go digital by 31 March 2013. The company is in talks with private equity investors to raise $75 million.

“There is a huge appetite now to invest in cable TV companies. The first phase of digitisation has been successfully implemented in the three metro cities of Mumbai, Delhi and Kolkata. There is also no uncertainty now about India’s digitisation programme across the country. We should see equity deals happening in the sector,” says IndusInd Media and Communications chief executive officer Nagesh Chhabria.

Chhabria believes the cable TV ARPUs (average revenue per user) would rise to Rs 500 by 2015, while carriage income would see a 10-15 per cent drop in DAS (digital addressable systems) markets.

“In the first phase, we are looking at a 15 per cent increase and believe our ARPU would settle at Rs 225. If the ARPU is lower than this, the local cable operator will not survive,” he says.

In an interview with Indiantelevision.com’s Sibabrata Das, Chhabria talks about the changing cable TV environment and the multi-system operator’s (MSO) expansion plans.

Excerpts:

Q. Is IMCL in talks with private equity investors to raise capital for funding its cable TV digitisation programme?
We are looking at raising $75 million and have mandated Ernst & Young for this purpose. There is a huge appetite now to invest in cable TV companies. The first phase of digitisation has been successfully implemented in the three metro cities of Mumbai, Delhi and Kolkata. There is also no uncertainty now about India’s digitisation programme across the country. We should see equity deals happening in the sector.

Q. Will $75 million meet IMCL’s total funding requirement for the second phase?
We will need Rs 6 billion as we expect to deploy four million set-top boxes (STBs). We have existing lines of credit from banks for $15 million. We can further raise $10 million of new debt. So along with equity financing, we should be comfortably placed. Of course, there is concern about the weakening of the rupee, which will mean STBs becoming costlier. But we are asking our STB manufacturer to offer us a better rate so that it offsets any rise in dollar value.

Q. Hasn’t IMCL lined up vendor financing so that the pressure on funding upfront eases?
We have not gone in for that option. The Cisco set-top boxes are 15-20 per cent more expensive than ours. Our model works out cheaper for us.

Q. Isn’t your estimate of the STB requirement too high as IMCL operates in only 15 out of the 38 cities that fall under digitisation in the second phase?
It is easier now to get into new cities because there is less entry cost. You don’t have to pay broadcasters for an assumed number of subscribers as digitisation would reflect your actual subscriber base. Capital expenditure, of course, is going to be higher but there is an assured revenue model.

We plan to enter into 15 more cities and anticipate a requirement of two million STBs from the new operations. For our existing operational cities, we would need two million STBs.

‘Even in the second phase, DTH will hardly be able to make an impact. Since most of the cities that fall in this round of digitisation are carriage markets, the national MSOs have a presence in them. Already 10 per cent of this market is digitised by the MSOs‘

Q. Will you take the acquisition route for entering into these markets?
Digitisation will throw open acquisition opportunities. There are many operators who will find it difficult to fund for the STBS. So they will either want somebody to invest in their cable networks or completely sell out. We are in talks with many independent operators. We can also enter on our own through fibre or available bandwidth.

Q. How are valuations getting decided?
We look at the profits made in the last fiscal and offer four times that value. The other option is to look at future profits (sans STB investment) made from the first six months of digital operations and then fix a value. But this has few takers as nobody wants to take the risk.

Q. Are you not looking at last mile acquisitions that will give IMCL direct ownership of the consumer homes without having to share a portion of the subscription revenue with the local cable operator?
We have an aggressive plan to own last mile. Our target is to own one million primary points in two years, up from our current base of 300,000. The acquisition of primary points, however, is much costlier and the price could be in the region of ten times the subscription fee. In Mumbai, this could go up to 20 times. But with digitisation necessitating billing systems, the primary points will be up for grabs.

Q. Has DTH been able to eat into IMCL’s subscriber base in the first phase?
We have hardly felt the impact. Even in the second phase, DTH will not be able to win over cable TV consumers in a big way. Since most of the cities that fall in this round of digitisation are carriage markets, the national MSOs have a presence in them. Already 10 per cent of this market is digitised by the MSOs. DTH will stand a better chance in tier III and IV towns. Acquisition of primary points in these smaller places will be a good strategy for MSOs to follow.

Q. How many STBs has IMCL deployed across three cities in the first phase?
We have already seeded 1.3 million boxes and our target is to touch 1.5 million. In Mumbai we will do 850,000 million and 0.5 million in Delhi. The progress in Kolkata is slow but it will also pick up.

‘We are looking at raising $75 mn and have mandated E&Y. There is a huge appetite now to invest in cable TV companies. The first phase of digitisation has been successfully implemented in the three metro cities of Mumbai, Delhi and Kolkata. There is also no uncertainty now about India’s digitisation programme across the country. We should see equity deals happening in the sector‘

Q. Is the conversion into second TV homes significant?
The demand for second TV sets is higher in Delhi than in Mumbai. But at a combined level we are talking of a 25-30 per cent conversion rate. We are working out a pricing for second and third TV sets as we have to match the DTH offers. But we are yet to ink deals with broadcasters on this.

Q. What is the kind of content deals that you have stitched with broadcasters?
We have done cost-per-subscriber deals. This works out better in the long term and is a more transparent system. We get to know our cost per box and it is easier to work out negotiations later. Our content cost would work out to 33 per cent of our subscription revenue.

We wanted to do three-year deals with broadcasters but they were not ready for it. Most of our content deals are on a yearly basis.

Q. What is the revenue share you are giving to local cable operators?
The value chain will take away 33 per cent of our subscription revenue. We also have operational costs and an investment on the STBs, but we also earn carriage or placement revenue. We are seeing a 10-15 per cent drop in our carriage deals for DAS (digital addressable system).

Q. Will ARPUs go up?
In the first phase, we are looking at a 15 per cent increase and believe our ARPU would settle at Rs 225. If the ARPU is lower than this, the local cable operator will not survive.

ARPUs for MSOs should at least be Rs 300 for them not to be dependent on carriage income. MSOs with ARPUs below Rs 300 will have to be carriage dependent.

Our forecast is that cable TV ARPUs would rise to Rs 500 by 2015. What will lift up ARPUs is HD and regional packages. Premium packages will also get sold.

Q. So are we talking of financially healthy MSOs in digitised India?
A lot on how the market shapes up will be decided over the next six months. We will know the actual seeding of boxes in consumer homes once the subscription collections happen.

Q. Will IMCL rely only on video services or there is a serious plan to pump up broadband investments?
We will be investing Rs 1 billion on broadband infrastructure in the next fiscal. We are also going to prepare for IPTV and OTT (over-the-top) services.

Q. What about launching local cable channels?
Yes, this is very much a part of the plan. Since there will be no constraints on bandwidth in the digital era, we are planning to put together 10-12 local channels, including local news. We are also looking at ad-free channels.

November 27, 2012

IMCL in talks with PE firms to raise $75 mn

MUMBAI: Hinduja-owned IndusInd Media and Communications (IMCL) is in talks with private equity investors to raise $75 million to fund the second phase of cable TV digitisation.

IMCL has mandated Ernst & Young to find an investor for its funding requirement. "With India mandating digitisation, there is a huge appetite to invest in cable TV companies. We are looking at raising $75 million. E&Y has been given the mandate for this purpose," IndusInd Media & Communications chief executive officer Nagesh Chhabria tells Indiantelevision.com.

IMCL, which operates its cable TV business under the Incablenet brand, will need Rs 6 billion as it is targeting four million set-top boxes (STBs). "We have existing lines of credit from banks for $15 million. We can raise $10 million of new debt," says Chhabria.

IMCL has a debt of Rs 3 billion

The multi-system operator (MSO) operates in 15 out of the 38 cities that fall under digitisation in the second phase. The plan is to also enter into 14 more markets. "We would require two million STBs from our existing cities. We anticipate another two million boxes from the new operations," says Chhabria.

Will IMCL look at acquiring cable networks for entering these markets? "There are many operators who will find it difficult to fund digitisation. We are in talks with independent operators. We can also enter on our own," says Chhabria.

IMCL has deployed 1.3 million boxes across three cities in the first phase. "Our target is 1.5 million STBs," Chhabria says.

The government has mandated digitisation in 38 more cities by 31 March 2013, after switching to digital delivery of cable TV in Mumbai, Delhi and Kolkata from 1 November. The revised deadline for switchover to digital delivery in Chennai is likely to be decided by the Madras High Court.

November 24, 2012

Big CBS Love’s new ad campaign talks about STBs

MUMBAI: Big CBS Love, the diva destination from the JV between Reliance Broadcast Network (RBNL) and CBS Studios International, is launching a new ad campaign aimed at increasing awareness about digitisation and empowering consumers with information, while parallelly enabling operators to build their brand equity.

Titled ‘Subscribe to Love on Your Set Top Box‘, the campaign launches on the back of RBNL‘s ‘Choose Your Set-Top-Box wisely‘ campaign.

The four week long campaign will use print, television, OOH and digital mediums.

The message of the campaign is that viewers should not miss the Divas and subscribe to the channel. The Divas the channel is referring to are- Sarah Jessica Parker (Sex and the City), Tyra Banks (America‘s Next Top Model), Sarah Michelle Gellar (Ringer), Oprah Winfrey and Priyanka Chopra (India‘s first Glam Diva).

Big CBS Networks business head Vishal Rally said, “Big CBS Love is all set to make the most from digitisation. Targeted at the upwardly mobile urban women audiences we have tailored our programming to offer what appeals to our audiences, making it the Diva Destination. With ‘Subscribe to Love on Your Set Top Box‘, we want to further awareness and ensure audiences are equipped to make the right choice when choosing their channels and DTH operators, so they don‘t miss out on their favourite Divas!”

Big CBS Love is distributed as part of RBNL‘s seven channel bouquet which also includes Big CBS Prime, Big CBS Spark, Big Magic, Spark Punjabi, Bloomberg UTV, and soon to be launched Big RTL Thrill.

June 4, 2012

‘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.

January 10, 2012

‘Pricing and creation of bouquets is our big differentiator’ Tony D’silva – Sun Direct COO

Kalanithi Maran is building his DTH empire on one key proposition: pricing. Mopping up two million subscribers in his home turf, Maran expects to taste success in the northern pockets of the country with the very same recipe.

Armed recently with Hindi content and sports channels, Sun Direct has launched in Mumbai and will be quickly moving to other markets as a pan India direct-to-home service. The target: six million subscribers by FY’10.

Sun Direct plans to invest Rs 35 billion in the venture over two years, out of which Rs 20 billion will have been consumed by the end of this fiscal. A large chunk of this will be towards providing set-top boxes (STBs) free.

Malaysia-based Astro has taken a 20 per cent stake in the company for Rs 5.90 billion. Sun Direct is a zero-debt company and there are no plans to raise further money through dilution of equity.

Sun Direct’s ARPU (average revenue per user) is the lowest among all the DTH operators, ranging between Rs 85-90. But the costs are tightly controlled and the company hopes to break even in six years.

In an interview with Indiantelevision.com’s Sibabrata Das, Sun Direct COO Tony D’Silva speaks about the company’s ambitious growth plans.

Excerpts:

How much is Sun Direct investing in the DTH venture?
We have an investment plan of Rs 35 billion over two years. We would have consumed Rs 20 billion by the end of this fiscal. We are pumping in the balance Rs 15 billion by FY’10.

How much has Astro put in so far?
Astro had made a commitment of putting in Rs 5.90 billion for a 20 per cent stake in Sun Direct. The full amount has already come in. The promoters have invested the rest of the amount. We are a zero debt company.

Is there a plan to raise further money through equity?
We have no such plan. We are considering whether it would make sense for us to raise debt and sit in excess liquidity at a time when the money market is tight. No decision has been taken in this regard. The promoters are ready to pump in whatever it takes to grow the business.

Since Sun Direct is offering STBs free, wouldn’t the company have to absorb huge losses?
The loss for this fiscal would be in the region of Rs 4.50 billion. This is very much a part of our business plan. For anybody who wants to build scale, the only way forward is to acquire customers with high subsidy offers. We have already mopped up two million subscribers and are looking at ending FY’09 with a base of three million. High volumes will help us reach break even as our costs are not as high as the others.

Even when Sun Direct’s ARPU is the lowest among all the DTH operators?
We have grown in the southern region and our current ARPUs are at Rs 85-90. We don’t see them going up significantly even after our launch in Mumbai and the rest of India. In the volumes game, the margins will improve once you reach a particular threshhold of numbers. Our infrastructure cost is also less than the other DTH operators. We will break even in six years.

‘Astro has put in Rs 5.90 billion. We are a zero debt company and expect to break even in six years‘

Is your content cost also lower than many of the other DTH operators?
Our content cost is 45-50 per cent, one of the lowest in the industry. We have not done MG (minimum guarantee) deals with broadcasters. Our main strategy is a la carte pricing.

What is your customer acquisition cost?
When we made our initial purchases, the STBs were costing us $55. But the economic meltdown is driving down the prices and our STBs currently cost $45.

The advertising budget for this fiscal is Rs 1.5 billion. We aim to spend a similar amount in the next fiscal unless the market dynamics changes drastically.

Our customer acquisition cost is Rs 4500. But with our pricing strategy, we expect to garner six million subscribers by FY’10.

The pricing strategy can attract wrong customers. Isn’t it a dangerous model to have if your churn rate is high while the customer acquisition cost is steep?
We have a five per cent churn rate. We realise that it is important to have a lower churn.

What is the strategy Sun Direct has adopted to repeat its success model outside its home turf?
While 99 per cent of our current two million subscriber base comes from the south, we have an aggressive pricing policy which will help us garner subscribers from the other pockets of the country. Our regional package, “My Pack,” will create hype in the market and drive our growth everywhere. Our bouquet of packages are value for money as we have custom designed packages for every state and region. We spent considerable amount of time since our launch last December.

We have also introduced a Hindi package. The ‘Shine Pack’ is available at Rs 499 and Rs 999 for five and 10 months respectively.

We have the highest number of add-on packages, ranging from Rs 6 to Rs 195. And the sports channels are available on a la carte rates.

Doesn’t it make sense to offer sports channels in packages?
The rates are too high for us to offer the sports channels in basic tiers or in bundles. We recently added the three ESPN Star Sports channels into our offerings. They are available on a la carte rates – ESPN and Star Sports are priced at Rs 38 each per month while Star Cricket costs Rs 32. Ten Sports is priced at Rs 20 while Zee Sports costs Rs 15. We are in negotiations with Neo.

Why was your launch in Mumbai delayed?
Adding Hindi and sports channels in the bouquet took time and the launch in Mumbai was delayed by a shortage of supply in STBs. There has been heavy snowfall in China and Beijing Olympics also delayed the supply of boxes. So during the festival season of Diwali, we did not have STBs to sell. Now the supply is comfortable and we are in a position to launch in other parts of the country.

Have you added more STB manufacturers into your list of vendors?
Our STB suppliers are China-based Coship and Korean firm Homecast. We have just added Samsung into our list.

Have you launched high-end STBs?
We have, but only in the southern market. They are priced at Rs 10,000 and are made by Homecast. Only a couple of hundreds have moved and we are just testing the waters.

Are you lining up premium content?
We feel the market is too early for premium and interactive content. Our first task is to be successful as a pan India operator. The creation of bouquets and pricing has to be a big differrentiator.

Some DTH service providers are advertising their Hindi movie offerings. Is Sun Direct going to create such content to grab viewers outside the south?
We don’t have any such plan at this stage. We are examining whether we should do that or go for HD. We have space for 5 HD channels. This will be for the top-end of the market and give us higher ARPUs.

Has Sun Direct approached Isro for more Ku-band transponders?
We have asked Isro for two more transponders. We offer 200 channels including 23 radio channels and video-on-demand. We are fortunate that we are co-located on the same satellite used by DD Direct Plus and so can get their channels without consuming our own bandwidth.

December 15, 2008

‘Pricing and creation of bouquets is our big differentiator’ : Tony D’silva – Sun Direct COO

Kalanithi Maran is building his DTH empire on one key proposition: pricing. Mopping up two million subscribers in his home turf, Maran expects to taste success in the northern pockets of the country with the very same recipe.

Armed recently with Hindi content and sports channels, Sun Direct has launched in Mumbai and will be quickly moving to other markets as a pan India direct-to-home service. The target: six million subscribers by FY’10.

Sun Direct plans to invest Rs 35 billion in the venture over two years, out of which Rs 20 billion will have been consumed by the end of this fiscal. A large chunk of this will be towards providing set-top boxes (STBs) free.

Malaysia-based Astro has taken a 20 per cent stake in the company for Rs 5.90 billion. Sun Direct is a zero-debt company and there are no plans to raise further money through dilution of equity.

Sun Direct’s ARPU (average revenue per user) is the lowest among all the DTH operators, ranging between Rs 85-90. But the costs are tightly controlled and the company hopes to break even in six years.

In an interview with Indiantelevision.com’s Sibabrata Das, Sun Direct COO Tony D’Silva speaks about the company’s ambitious growth plans.

Excerpts:

How much is Sun Direct investing in the DTH venture?
We have an investment plan of Rs 35 billion over two years. We would have consumed Rs 20 billion by the end of this fiscal. We are pumping in the balance Rs 15 billion by FY’10.

How much has Astro put in so far?
Astro had made a commitment of putting in Rs 5.90 billion for a 20 per cent stake in Sun Direct. The full amount has already come in. The promoters have invested the rest of the amount. We are a zero debt company.

Is there a plan to raise further money through equity?
We have no such plan. We are considering whether it would make sense for us to raise debt and sit in excess liquidity at a time when the money market is tight. No decision has been taken in this regard. The promoters are ready to pump in whatever it takes to grow the business.

Since Sun Direct is offering STBs free, wouldn’t the company have to absorb huge losses?
The loss for this fiscal would be in the region of Rs 4.50 billion. This is very much a part of our business plan. For anybody who wants to build scale, the only way forward is to acquire customers with high subsidy offers. We have already mopped up two million subscribers and are looking at ending FY’09 with a base of three million. High volumes will help us reach break even as our costs are not as high as the others.

Even when Sun Direct’s ARPU is the lowest among all the DTH operators?
We have grown in the southern region and our current ARPUs are at Rs 85-90. We don’t see them going up significantly even after our launch in Mumbai and the rest of India. In the volumes game, the margins will improve once you reach a particular threshhold of numbers. Our infrastructure cost is also less than the other DTH operators. We will break even in six years.