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Q1-2016: Affirmation that DTH in India has turned the corner?

corner last
last quarter that the DTH industry in
India had probably reached an
inflection point in FY-2015 (financial
year ended 31 March, 2015, previous
year), and more so during the last
quarter of the previous year
(Q4-2015). The financial results for
the quarter ended 30 June, 2015
(Q1-2016, current quarter) seem to
confirm this fact.
Another endorsement of this website’s
surmise is a single statement in the
Sun TV Network’s earning release for
the current quarter – Subscription
revenues continue to grow with cable
TV revenues growing by approximately
13 per cent and DTH subscription
revenue growing by nine per cent over
the same quarter of last year. Sun TV
had approximately eight per cent
market share among the private
Indian DTH players as on 31 March,
Note: 100,00,000 = 100 lakh = 10
million = 1 crore.
This report covers only the three of
the seven DTH service providers in
India (as had the previous one) since
the other four – Reliance Digital TV,
Sun Direct (about 97 lakh subscribers
as on 31 March, 2015), Tata Sky and
DD Free Dish are not listed on the
bourses and their financial numbers
are not available, unless the
principals of these companies/
segments chose to reveal them. The
three players – Airtel DTH, Dish TV
and Videocon d2h have already been
covered in our earlier report
mentioned above.
Despite Q1 being a relatively weak
quarter seasonally, two of the three
players – Airtel DTH, Dish TV and
Videocon d2h have reported QoQ and
YoY growth across all the important
parameters that include revenue,
operating profits with healthy
margins, subscription numbers,
average revenue per user (ARPU) for
the current quarter. The third player
Videocon d2h, has also shown
improved numbers across all the
parameters mentioned above, except
in the case of operating profits – the
company’s YoY and QoQ loss reduced
significantly in Q1-2016.
Dish TV is the largest DTH player in
terms of subscriber base and probably
revenue too, in India. The company
posted a 55.2 per cent QoQ growth in
consolidated profit after tax of Rs
54.21 crore (7.2 per cent margin) in
Q1-2016 on revenue of Rs 736.68
crore. For the corresponding quarter
of last year, Dish TV had reported a
loss of Rs 14.97 crore on revenue of
Rs 618.04 crore.
As a matter of fact, Dish TV is also
the first among listed DTH companies
in the country in FY-2015 and
Q4-2015 to report a profit after tax
as opposed to the operating profits
reported by a segment of the other
goliaths for whom DTH services is just
another small segment.
Airtel DTH reported the highest YoY
growth in ARPU in Q1-2016, as well as
the highest ARPU among the three
players in this report.
Let us look at some of the numbers
reported by the three players:
Airtel DTH
For Bharati Airtel Limited (Airtel),
Digital TV services (Airtel DTH)
contributes just a small fraction to
its overall numbers. The DTH
segment’s contribution to overall
Airtel numbers is approximately four
per cent to revenue and three per
cent to EBIDTA, and yet it had a seven
per cent share in the company’s capex
investments pie to the extent of Rs
211.3 crore fresh investments in
Q1-2016. Overall, cumulative
investment made by Airtel into its DTH
segment is Rs 5621.6 crore (about
three per cent of Airtel’s overall
cumulative investments).
Mentioning the DTH segment in
Airtel’s Q1-2016 earning release,
Airtel MD and CEO, India & South Asia
Gopal Vittal said, “I am pleased that
our revenue growth is broad based
across all business units, especially
the domestic enterprise and corporate
segment, which saw revenues grow by
18.1 per cent, and DTH business which
had a underlying topline growth of
26.8 per cent.”
Airtel DTH reported 15.8 per cent
increase in YoY revenue to Rs 684.8
crore in Q1-2016 as compared to the
Rs 591.5 crore in Q1-2015 and 7.9
per cent more than the Rs 634.8
crore in Q4-2015.
The telecom major’s DTH segment
reported a 67 per cent growth in
operating profit (EBIDTA) in the
current quarter at Rs 240.8 crore
(46.1 per cent margin) as compared to
the Rs 143.8 crore (24.3 per cent
margin) in Q1-2015 and 15.9 per cent
more than the Rs 207.8 crore (32.7
per cent margin) immediate trailing
Airtel’s DTH segment reported 10.9
per cent YoY growth in Airtel DTH
customer base for the current
quarter at 104.12 lakh as compared to
the 93.88 lakh in Q1-2015 and 3.4 per
cent growth as compared to the
100.73 lakh in Q4-2015.
As mentioned above, ARPU in Q1-2016
improved significantly to Rs 222 as
compared to the Rs 214 in both
Q1-2015 and Q4-2015. Monthly churn
in the current quarter was higher at
0.8 per cent as compared to the 0.6
per cent in the corresponding year
ago quarter, but lower than the one
per cent in the immediate trailing
Dish TV
Dish TV has shown almost flat QoQ
revenue growth in Q1-2016. The
company reported 0.9 per cent higher
consolidated net total Income from
Operations (TIO) in the current
quarter at Rs 736.68 crore as
compared to the Rs 729.93 crore in
the immediate trailing quarter and
19.2 per cent more than the Rs
618.04 crore in Q1-2015.
As mentioned above, the company has
reported 55.2 per cent higher PAT at
Rs 54.21 (7.4 per cent margin) as
compared to the Rs 34.94 crore
(margin 4.8 per cent) in Q4-2015.
The company had reported a loss of Rs
14.97 crore in Q1-2015, while it had
reported a consolidated PAT of Rs
3.14 crore for FY-2015.
With effect from 1 April, 2015, Dish
TV says that it has started netting-
off certain collection fees paid to its
trade partners from its topline. This
has resulted in the company’s topline
getting shrunk by around four per
cent, with a similar number being
decreased from the middle line.
Further, Dish TV transferred its non-
core business (including set-top
boxes, dish antenna and related
services) to its wholly owned
subsidiary Dish Infra Services Private
Limited (formerly known as Xingmedia
Distribution Private Limited) on 1
April, 2015 on a going concern basis.
The company reported addition of
3,90,000 net subscribers in Q1-2016,
taking its total subscriber base to
1.33 crore as on 30 June, 2015. Post
consolidation, Dish TV’s ARPU was Rs
173 versus Rs 172 (QoQ) in Q4-2015.
The company reported consolidated
subscription revenues at Rs 628.88
crore, up 20.6 per cent YoY.
Dish TV chairman Subhash Chandra
said, “Dish TV has been actively
contributing to the ‘Digital India’
movement by digitizing analog TV
homes in DAS phase 3 and 4 markets
and remains optimistic about its
prospects to acquire a substantial
share in these markets.”
Dish TV managing director Jawahar
Goel added, “Our first quarter results
are in line with the success of our
regional and high definition (HD)
strategy. Our regional offering,
‘Zing’, would soon be launched in
Kerala and would carry the largest
cache of vernacular channels offered
in that market. ‘Zing’ cemented Dish
TV’s supremacy in the DAS Phase 3 and
4 markets with custom-made content,
hardware and service packages for
the regional audience. High definition
continues to be a value driver and a
key differentiator for us compared to
other DTH offerings in India. Dish
TV’s industry leading bandwidth
capacity supports 42 HD channels, the
largest on offer by any distribution
platform so far.”
Further, Dish TV recently formed a
content negotiating joint venture
(JV) called Comnet with its group
company and multi system operator
(MSO) Siti Cable Network Limited.
Both Dish TV and Siti Cable are equal
partners in the JV that came into
existence on 1 July, 2015. As part of
the JV, both companies will hold joint
discussions with broadcasters post,
which separate direct contracts
between the broadcaster and
distribution platform will be signed.
The JV also tends to bring together
the industry on contentious taxation
issues like the recent arbitrary hike
in entertainment tax in Delhi.
Videocon d2h
For Videocon d2h, the addition of 6.1
lakh gross subscribers and 4.6 lakh
net subscribers in Q1-2016 coupled
with higher ARPU for Q1-2016,
resulted in a YoY 32.1 per cent
growth in subscription revenue and
23.3 per cent growth in revenue from
operations (TIO) in Q1-2016. On a
QoQ basis, subscription revenue
increased 3.7 per cent, while TIO
increased six per cent. The company
also reported a marked fall in finance
costs and consequently the company’s
loss in the current quarter more than
halved to Rs 24.4 crore as compared
to the Rs 55.8 crore in Q1-2015 and
was less than a third of the Rs 75.7
crore in Q4-015.
TIO in Q1-2016 at Rs 662.83 crore
was 23.3 per cent more than the Rs
537.65 crore in Q1-2015 and 6 per
cent more than the Rs 625.27 crore in
Videocon achieved strong subscription
revenue growth of 32.1 per cent to Rs
599.61 crore (90.5 per cent of TIO) in
Q1-2016 as compared to the Rs
453.77 crore (84.4 per cent of TIO) in
Q1-2015 and growth of 3.7 per cent
as compared to the Rs 578.33 crore
(92.5 per cent of TIO) in the
immediate trailing quarter Q4-2015.
Average revenue per user (ARPU) in
Q1-2016 at Rs 205.30 was 9.7 per
cent more than the Rs 187.14 in the
corresponding year ago quarter and
was 1.5 per cent more than the Rs
202.17 in Q4-2015. (Conversion rate
from 1 dollar = 62.59 Indian rupee for
all the three quarters).
The company considers advertisement
revenue as an important contributor
to its numbers, and is beginning to see
an encouraging response from multiple
advertisers. Videocon d2h recently
set up an advertising team to sell ad
inventory on its own proprietary
channels and added three proprietary
channels – d2h nursery rhymes; d2h
Cinema HD; and another music
channel. The company has also
launched three Active services,
namely, Active Kids, Active Games and
Active Learning in this quarter, which
the company says are beginning to get
traction from its customer.
Videocon d2h executive chairman
Saurabh Dhoot said, “We are pleased
to declare a strong set of results for
the quarter ended 30 June, 2015 and
are on track to achieve the guidance
provided for fiscal 2016. With a strong
subscriber growth outlook, DTH sector
gaining market share over cable and
an improving ARPU scenario; we
believe we are just at the beginning
of a multi-year strong growth
The three players considered in this
report had an approximate combined
market share of 67 per cent in among
the private players India at the end
of the previous year, or more than
two-thirds. It is still early days as
yet to really conclude that the DTH
sector in India has turned the corner
based on good results for only two
consecutive quarters reported by
three companies that represent about
two thirds of the sector. Of course,
the amount of representation goes up
to 75 per cent of the private players,
if one were to consider the Sun TV
market share of eight per cent.
However, looking at the intensity and
the moves of these players, it is quite
likely that the sector should continue
showing improved positive results, and
may have turned the corner in

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