Dish TV Q4FY17 Concall Summary

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Financial Highlights

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  • The division of revenue is: Subscriber revenue-Rs. 692 crores, Bandwidth-Rs. 25 crores, Advertisement-Rs. 11 crores, Teleport-Rs. 6 crores, Other Operational income-Rs. 3 crore
  • The EBITDA for this quarter was 2,012 million as compared to 1,951 million for the previous quarter
  • EBITDA margin was flattening at 27.2% against 27.5% for the previous quarter
  • The content cost paid to channels has grown by Rs. 19 crores
  • The CAPEX is estimated to be 800 crores for FY18
  • The present net debt of the company is 690 crores
  • The company migrated to IND-AS from iGAAP due to value gap and depreciation is higher due to this reason. The depreciation is 180 crores in this quarter and will revert to its original values of 160-165 crores next quarter onward
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Key Metric Updates

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  • Subscription revenues grew 11.5% to 6,917 million for Q4FY17
  • ARPU (Average Revenue Per User) grew 10.4% Quarter-on-Quarter at Rs. 148 (from Rs.138)
  • ARPU should get tailwind as major MSO’s have started prepaid model
  • The company added 186 thousand new subscribers during Q1FY18
  • The net subscriber base of the company has now increased to 15.7 million
  • The market is hoping to recover from the effects of demonetization from the next quarter onwards
  • Direct Collection should help correct various anomalies in MSO business model and lift overall industry ARPU’s
  • Seasonality impacted growth in advertisement and bandwidth revenues. However, the company is optimistic that they will improve in the future
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New initiatives

  • For better inventory management and reduced holding costs, voucher-based distribution system has been initiatedin order to stock its trade partners
  • In the new system, paper vouchers would be stocked instead of physical hardware
  • This system would help in reducing market inventory, which is presently around 900,000 to around 50%
  • The company has introduced a Rs.160 plus taxes pack
  • All channels (except sports & south) at Rs.8.50 & Rs.17(plus taxes) for SD and HD channels (none are margin dilutive)
  • SD subscribers now get teasers to HD subscription
  • Small sample to HD packs to attract HD subscribers
  • The company deep discount and long-term discount of loans
  • Launched scheme of Rs.500 per year for subscribers in suspension mode due to Prasar Bharti change to MPEG-4 change

Churn

  • The churn for this quarter was slightly higher than .9% at 1%(due to demonetization)The churn rate earlier stayed at 8%-9%p.a., but the churn rate should remain below 12% due to effects of Demonetisation, GST, etc.

GST effect

  • GST is to be paid upfront as soon as the money is received from the customer
  • Due to the implementation of GST, there is an overall decrease in indirect taxes to the DTH industry
  • Total GST paid for the current quarter is Rs. 1,350 million
  • Reduction in irrational cable competition due to check on tax avoidance in the informal cable sector

Defenses from Other Content providing services

  • Taking content costs of OTT platforms into consideration, Dish TV has started renegotiating content costs
  • The company has achieved success in reducing costs with a significant broadcaster recently
  • The cost of TV streaming is still more than 3-5 times the cost of content on DTH

Merger

  • NCLT(National Company Law Tribunal) approved the merger between Videocon D2H and Dish Tv
  • Net synergies of Rs. 1,800 million in FY18 and Rs. 5,100 million FY19

Future Guidance

  • The future estimates for EBITDA are 30% plus and will remain at 29%-31% for the year
  • ARPU of the company may be volatile due to downward market trends but is growing due to the addition of HD subscribers (an increment of 3 lakh)
  • Revenue to grow at 7%-8% for FY18
  • The number of subscribers is estimated to increase by 1 million due to the recent merger with VideoconD2H
  • The subscriber acquisition cost of the company presently is Rs. 1,800 but is expected to come down to around Rs. 200 due to reduction in trade margins
  • The company is soon launching hybrid set-top box to bring back OTT services which were present earlier

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