New Delhi: Not satisfied with the ‘must carry’ diktat and regulation of carriage fee outlined in the latest regulations by the broadcast regulator, both multi-service operators (MSOs) and news broadcasters may soon take legal recourse. MSOs and broadcasters are studying the order before approaching the courts, sources said.

On Monday night, the Telecom Regulatory Authority of India (Trai) issued the tariff order and regulations for digital addressable system (DAS) roll out mandating every MSO to upgrade its delivery platform so as to carry 500 channels in DAS areas, starting with the four metros. DAS entails mandatory use of a digitally addressable set-top-box for accessing TV channels and encryption of all television signals in DAS notified areas.

“The tariff order applies equally to DTH service providers and MSOs. No such ‘must carry’ mandate is imposed on DTH operators. The Trai orders directly attacks every MSOs right to do business. This should be challenged in court,” said a top executive in MSO Alliance, the apex body of leading MSOs.

News Broadcasters Association, the apex body of leading news channels too as expressed its displeasure accusing the sector regulator of legalising the menace of carriage fees when DAS in itself is supposed to eliminate it.

Both Trai and the ministry of information and broadcasting have supported the move. Trai chairman J S Sarma ruled out any roll back of the DAS order. Sarma told a news channel that Trai does not issue regulations and tariff order to roll back or re-look at them the next day. On its part, Uday Kumar Varma, Secretary, I&B ministry told FE that the DAS order was balanced and pro-consumer.

But MSOs are not satisfied. “It costs a lot to upgrade the network and digital head-ends in order to make them ready for carrying 500 channels. While there may be a demand for these many channels in metros and bigger towns, no such demand is there in smaller towns. This directly impacts the fundamental right of doing business,” said the head of regulatory and legal affairs in a leading MSO brand requesting anonymity as the matter was still be discussed internally.

Even the markets welcomed the Trai order as the stocks of MSOs like DEN, Hathway and WWIL went up by 2.12%, 19.23%, and 4.73% respectively. However, the stocks of some broadcasters took a beating. News broadcasters like NDTV -0.84%, Zee News (-2.31%), and TV Today (unchanged), while general entertainment channels like Zee Entertainment closed in the red while Sun TV saw 5% gain.

Source: The Financial Express

Leading channels like Colors, CNN-IBN, CNBC TV 18, Sun TV and Hungama have switched off in all Digicable networks in Central, North, West and East India due to non-payment of subscription fees.

With effect from today, Viacom18, Network 18, Sun Network and Disney channels distributed by Sun 18 (North) will be switched off across Digicable networks across North, West, East and Central India.

Digicable viewers across these regions will not be able to view their popular shows and programmes on leading channels like Colors, MTV, CNBC TV 18, CNN-IBN, Sun TV, Gemini, Surya, Disney Channel and Hungama, amongst others, from April 13 onwards.

The switch-off by the broadcasters is due to non-payment of subscription fees and breach of agreement by Digicable. Sun18, which distributes 46 channels from the four leading networks, had given Digicable a 21-day notice to ensure that the much-delayed subscription payments are paid. The deadline of the notice ended on April 12, 2012.

Digicable is one of the largest cable distribution companies in the country. It is owned and promoted by Jagjit Singh Kohli, MD & CEO, and Yogesh Shah, Joint MD. Kohli, during his three-decades-long career, has set up and headed major Multi Service Operators (MSOs), including InCable, WinCable (now renamed Hathway Cable and Datacom Ltd.) and Wire and Wireless (India) Ltd.

Source: Bestmediainfo.com

Noida, April 02, 2012: Wire and Wireless (India) Ltd. (WWIL), the leading cable television service provider in India will be offering highest number of channels in the first phase of digitization in its three lucrative markets of Delhi, Kolkata and Mumbai, under SITI Cable brand name.

SITI Cable is on the forefront to provide advanced IP based digital delivery platform that will transmit superior quality TV signal to subscribers. It will also delight subscribers by offering 400 SD channels having better quality picture and audio compare to analogue cable TV. Further it will offer 30 HD Channels and TV signals that remain uninterrupted even in bad weather. The subscriber needs to install SITI digital Set-Top-Box (STB) with their TV set to receive these high quality TV signals.

With about three months to go for first phase of digitization of cable tv networks in Delhi, Mumbai & Kolkata comes into effect; the company has made all arrangements to deploy three million set-top-boxes in these three cities. STB’s are getting procured from multiple vendors so as to ensure smooth supply of STB’s to the subscribers. The STB deployment to the subscribers has started in Delhi and Kolkata market

The multi-fold increase in subscriber number is expected with the digitization. Such exponential growth in subscriber numbers requires huge infrastructure to serve them as well, for which SITI Cable is well positioned.

The company is technologically ready to further augment its channel carrying capacity in times to come.

About Wire and Wireless (India) Limited
Wire and Wireless (India) Limited is a part of the Essel Group, which is one of India’s leading business houses with a diverse portfolio of assets in media, packaging, entertainment, technology-enabled services, infrastructure development and education.

Wire and Wireless (India) Limited is one of India’s largest Multi System Operator (MSO). With 53 analogue and 11 digital head ends and a network of more than 12000 Kms of optical fibre and coaxial cable, it provides its cable services in India’s 57 key cities and the adjoining areas, reaching out to over 10 million households.

Wire and Wireless deploys State-of-the-art technology for delivering multiple TV signals to enhance consumer viewing experience. Its product range includes, Analogue Cable Television, Digital Cable Television, Broadband and Local Television Channels. Wire and Wireless has been providing services in analogue and digital mode, armed with technical capability to provide features like Video on Demand, Pay per View, Electronic programming Guide (EPG) and gaming through a Set Top Box (STB). All products are marketed under SITI brand name.

SITI Cable organized business partners meets to set the pace of cable TV digitization, with the Government recently passing the Cable Television Networks (Regulation) Amendment Bill requiring the four metros Delhi, Mumbai, Kolkata and Chennai to shift to digital cable by June 2012 and the rest of the country to be digitized in phased wise manner by December 2014.

With this bill, the onus shifts now on cable service providers to gear up for shifting to digital cable TV infrastructure from analogue.

To speed up this transition, SITI cable organized the series of meets for Delhi Cable Operator in groups of hundred. These meetings were aimed at orienting the local cable operators (LCO’s) towards digital addressable systems (DAS) and its benefits.

In a scenario where consumers have access to newer technologies such as DTH, IPTV which are bringing in superior quality and service & changing the rules of media distribution, the digital addressable systems can offer more TV channels to the consumers with better quality picture and sound, attractive channel package offerings, HD Channels and TV signals that remain uninterrupted even in bad weather.

DAS will also enable cable operators to tap additional business opportunities in the form of value-added and interactive services. It has the provision of broadband and triple-play services through the network which will help in boosting up the revenue of the Cable Operators.

The issues related to the up gradation of existing networks, technical support and training in implementing the system, commercials involved etc were discussed during the meeting.

Team SITI Cable has also explained the Subscriber management system which gives full independence to the business partners in managing their set of subscribers and allows them to addresses activation, deactivation, package change request, complaints etc of the subscribers. The most advanced IP based digital head end set up by SITI Cable will deliver 400 channels along with 30 HD channels in the initial phase. This head end is equipped to deliver up to 1000 channels apart from providing VAS like gaming, movie on demand etc too.

Addressing the gatherings Mr. Anil Malhotra, COO of WWIL said that, “The objective behind developing such Subscriber management system (SMS) is to empower the business partners, the most critical stakeholder in the value chain. The developed system is the replica of the present model of analog business with improved services on digital platform.”

He further added, “Digitization doesn’t mean just putting set top boxes in every cable television home. Lot of work needs to happen in terms of back-end, technology, systems, processes etc. He explained this is precisely what SITI cable have been doing for last few quarters building on infrastructure and backend system & processes. In our areas, we will ensure 360 degree process for migrating to digitization. We are in a very good shape to take off.”

During the meet Business partners of Delhi have also visited SITI cable most advanced IP based digital head end & other infrastructure.

In a nutshell digitization is the lifetime opportunity for cable service providers to increase revenue by offering more channels and VAS, to compete with alternate technologies and build the long term relationship with the end consumers.

SITI Cable will organize more such business partner’s meets in various other cities as well, to build the awareness about digitization.

With digitisation being made mandatory in the cable industry and deadlines being announced, players hope is that the current 49% which is allowed in the industry would get filled up even if 74% doesn’t come immediately.

According to Avnindra Mohan, president – legal & regulatory affairs, Essel Group hiking the foreign direct investment (FDI) limit from 49% to 74% in the cable distribution platform is a welcome step.

However, Mohan feels that digitisation involves huge capital outlay. In an interview to CNBC-TV18 Mohan said that the total funding required for the industry as a whole would be in the range of Rs 25,000-30,000 crore.

“As far as WWIL is concerned we are also going to substantially invest in that because we are a strong player in the market. We would be looking for investment outlay in the range of Rs 200 to 250 crore,” he added.

Below is the edited transcript of Mohan’s interview with CNBC-TV18. Also watch the accompanying video.

Q: What is your own sense now that digitization is near, do you think people like you all will be able to attract FDI at all in your company?

A: The intention of the government is becoming quite clear with issuance of notification on November 11, in which they have announced the schedule of the impending digitisation which is going to come. With that, now the onus shifts on the industry to implement it successfully. Digitisation involves huge capital outlay, it is totally capital intensive.

In the sense that the cable industry has to gear up in order to upgrade its delivery infrastructure. They need set top boxes, encryption systems because in digitisation it is mandatory to encrypt all the channels. Sophisticated subscriber management systems will have to be installed. So for all that capital is needed.

We have now learnt that DIPP has initiated a proposal which TRAI had recommended long ago – back in June 2010, to revise the limit in the cable and in DTH sector. Primarily relating to carried services and in content services they have recommended the status-quo. DTH will also play a crucial role in the digitisation initiative of the government. So for both cable as well as DTH this step is a welcome step according to me.

Q: Can you give us some numbers in terms of capital for a company like yourself how much do you think you would require to completely digitalise the cable business?

A: As far as the estimates are concerned, in my previous interaction I had pointed out that the total outlay for the industry per se is going to be around Rs 25000-30000 crore. It all depends upon the initiative and the first mover advantage kind of thing which a company intends to take.

For that company needs to prepare ahead of digitisation as well. As far as WWIL is concerned we are also going to substantially invest in that because we are a strong player in the market. We would be looking for investment outlay in the range of Rs 200 to 250 crore.

Q: You have reported losses for the last several quarters, what does your debt standing at and what would be your debt equity ratio?

A: As far as the present status is concerned, it is not surprising because all cable companies are mostly in red. But since last few quarters we have been consistently showing EBITDA positive. That is primarily because of the fact that we have restructured our business model.

At present the business model is totally skewed because subscription revenue across value chain is not properly and equitably distributed. But with digitisation coming in that ratio would be corrected and once that ratio corrects there would be manifold jump in the subscription revenues.

Q: That point is taken that digitization is going to ensure future viability but what is the current status of debt and equity?

A: I am not too sure about the current status of debt equity; it is for the COO of WWIL. I am replying from legal perspective and regulatory perspective. Ideally speaking even if the debt-equity ratio comes to 1.5:1, that would be good and that is what we are looking for in future.

Q: The FII limit of WWIL is quite low so just about 4%, do you see any kind of further institutional participation coming in?

A: Absolutely because of the fact that hitherto FII was not very sure as to whether what is going to be the kind of policy initiative that the government is going to take, what is the future of this business. Now with the government formally announcing its policy initiatives and coming in of digitisation is inevitable, there are bound to be improvement in the financial results of the company. That would definitely evince interest in FIIs as well as direct FDI.

Q: Are you speaking to anyone already, FDI partners?

A: Yes. We are exploring all the possibilities. We are speaking for FDI and we are exploring other possibilities of other instruments of raising finance from the overseas market

Q: What would be the other instruments?

A: It could be GDRs, FCCBs etc it will be a mix kind of thing. It need not necessarily direct FDI. We are exploring direct FDI also because it all depends on competitive cost at which one can get capital. This is because once capital is there, there would be a depreciation impact on the results also. So we will be going in for judicious kind of mix considering the cost of capital and the availability.

Q: Last time you had indicated that you might be looking to get a strategic investor to the business as well. In terms of timeline how far is that process before completion?

A: We are already engaged in negotiations and now with the government on November 11 announcing the phase wise implementation schedule, these negotiations which were at primary phase would move at faster pace. One can expect a breakthrough in the next few months.

Q: Will Rs 100 crore come from FDI partner, what are you looking at all? Some thing in terms of a number since you said that your capex plan is Rs 200-250 crore?

A: That is we are looking for external sources. So far as our internal sources are concerned, we are already on track. Most of our networks are digital friendly. As far as the set top boxes are concerned we have tied up with manufacturers.

We have got internal outlays as well which are accruals from internal group sources itself. As far as outside funds are concerned, it can be domestic sources, FDI or other instruments.

So, considering the cost of capital, the judicious mix which would give us an optimum rate of capital we would go in for that. It may include component of FDI; it may include components of other instruments that I talked about, so we are yet to decide the mix.

Source: www.moneycontrol.com

Sudhir Agarwal, CEO , WWIL, in an interview with ET Now talks about company’s overall condition and prospect. Excerpts:

ET Now: This is a good news for the industry as a whole, FDI in DTH being raised from 49% to 74%, give us a sense of what kind of an impact this could potentially have on WWIL?

Sudhir Agarwal: It is a very good and encouraging initiative from the government to raise the current FDI limit across platforms in our industry from 49% to 74% across DTH, IPTV, MSO platforms. As you would know, government recently announced an initiative to digitise the whole country and they came out with a sunset date of December 2014 when the entire nation would be digitised and that’s a huge announcement and industry game changing announcement as far as I am concerned. This would require a substantial amount of investment as well. My belief is the current announcement of raising the FDI would encourage a lot of foreign players who till now were kind of waiting and watching before investing into India because of the very nature of the business here, the distribution business was essentially very unstructured and analogue in nature. So this announcement coupled with the announcement, which happened a couple of weeks back for digitising the country would mean a lot for this industry going forward.

ET Now: Given that your FII limit is currently quite low around 4%, will this move? Will you look at more foreign institutional participation as well?

Sudhir Agarwal: I am sure and I am confident about it. You are right, current foreign investment into our company is low but with the announcement of digitisation, not only WWIL but companies across platforms would benefit. This would help us fructify our plans going forward.

ET Now: Earlier you had been saying that you are open to the idea of a strategic sale as well and getting in a strategic investor to raise capital for your company. What is your view right now? Do you maintain that position?

Sudhir Agarwal: We are open to foreign investors having a dialogue with us. We will examine proposals based on the exact norms that government comes out with, so we will see as we come to the bridge, we will cross the bridge when we reach it.

ET Now: How much of a capital do you think you would require to completely digitise your analogue cable business?

Sudhir Agarwal: If you ask me as an industry, the investment required would be quite substantial. In the next three years, my guess is the investment could range up to US$3 billion and that’s a huge amount. So across platforms in this industry for digitisation, the requirement would be anywhere between $2.5-3 billion.

Source: The Economic Times

In a move that will ensure that the cost of cable channels will continue to remain affordable for consumers even after shifting from analogue to digital services, the Supreme Court last week ordered a new tariff formula for all digital addressable platforms.

The apex court has fixed 42 per cent of non-CAS tariffs as the new benchmark for all future commercial agreements between broadcasters, direct-to-home (DTH) firms and MSOs offering digital cable services. This formula will now replace the earlier tariff orders (35 per cent by Trai in July 2010 and 50 per cent by TDSAT in July 2006).

Simply put, this means that DTH, digital cable, and IPTV operators will only pay the broadcasters up to 42 per cent of the tariff fixed in the analogue cable market (non-addressable and un-regulated). This is important because the government has recently oulined December 31, 2014 as the cut-off date for shifting to digital and addressable cable services.

Experts said the new order will not have much impact on the DTH operators as most of them have signed long-term commercial deals with the broadcasters. However, this will help the MSOs get into agreements with broadcasters under a well-defined commercial formula.

The apex court gave the interim-order while hearing a plea of the Telecom Regulatory Authority of India (Trai). The broadcast regulator had gone to SC challenging a TDSAT judgement of December 2010 which had set aside its 35 per cent tariff order for DTH platform. The Trai’s 35 per cent tariff formula was opposed by most broadcasters.

A bench comprising justices RV Raveendran and AK Patnaik stayed the order of the Telecom Disputes Settlement & Appellate Tribunal (TDSAT), which had set aside Trai’s notification of July 21.

While most MSOs and DTH operators have welcomed the move, the new formula will impact the margins of broadcasters and DTH operators as they will realise lower revenue from digitally addressable homes, experts said.

“The court’s order has removed the tariff-hurdles in the path of digitalisation. As we move towards the complete digitalisation of the cable services, the 42 per cent tariff formula will help all stakeholders in coming years,” said Ashok Mansukhani, president, MSO Alliance, the apex body of leading Multi-Service Operators (MSO).

A top executive of a leading MSO firm said the 42 per cent tariff order will drastically reduce the litigations between broadcasters and cable distributing firms. “Also, there will be a five to six fold jump in the subscription declaration as a result of digitalisation and the clear tariff formula on digital platforms,” the MSO said.

The Shares of Dish TV tumbled as much as 6.5 per cent after the news of SC’s new tariff formula came out. At the close of trading hours on Monday, Dish TV’s stocks were down 2.49 per cent. In contrast, the scrips of MSOs like DEN (5.63 per cent), Hathways (9.87 per cent) and WWIL (4.44 per cent) saw upward movement.

Before the Trai’s 35 per cent tariff order proposal, all commercial deals between broadcasters and DTH operators materialised at 50 per cent of non-CAS rates (a formula given by a 2006 TDSAT judgement). However, in July last year, Trai, after consultation with the stakeholders, had came out with a new tariff order fixing the tariffs on DTH at 35 per cent of the non-CAS rates. This was challenged by most cable distribution firms and broadcasters. In December 2010, TDSAT set aside the Trai’s 35 per cent tariff order.

According to the earlier (50 per cent of non-CAS rates) formula, a channel costing Rs 50/subscriber in non-CAS areas (most of India) was to be priced upto Rs 25/subscriber on the DTH/digital cable platform (50 per cent formula). Now the same channel will can not be priced beyond Rs 21 (42 per cent formula as per SC’s interim order).

Source: Indian Express

MUMBAI: Wire and Wireless (India) Ltd is targeting a revenue of Rs 3.4 billion and expects to be Ebitda positive for the full-fiscal, a source close to the company said.

Fuelling this over 20 growth will be the MSO’s entry into new markets, a projected rise in carriage revenue and growth in subscription income.

WWIL is setting up a joint venture company, Siti Vision, with a group of people who have strong ground control to revive its presence in Hyderabad. “WWIL will hold 51 per cent stake. The content has been tied up with the broadcasters and the cable TV service will launch in September. The JV will also expand operations into other parts of Andhra Pradesh,” the source said.

The company has also firmed up plans to invest Rs 200 million towards acquisition this fiscal and is conducting due diligence on five cable networks. “The investment on acquisition could climb if good opportunities throw up,” the source added.

Carriage income is expected to make up 57 per cent of WWIL’s total revenue in FY’11. The MSO has a presence in 54 cities across the country and is eyeing acquisitions in the Tam markets (which influence TV ratings and fetch high carriage fees).

WWIL has eight digital head-ends and is planning to add more during the fiscal. It has stopped its Headend-In-The-Sky (HITS) operations after taking a loss of Rs 1 billion. Zee Group chairman Subhash Chandra told shareholders at the AGM that launching HITS was a mistake as the regulatory system was not in place and “it was a launch ahead of its time.”

WWIL has reduced its debt from around Rs 3.50 billion in FY’10 to Rs 3 billion.

For the three months ended June, WWIL posted an operating consolidated revenue of Rs 692.46 million, up from Rs 630.06 million in the year-ago period, and turned Ebitda positive with the operating profit standing at Rs 74 million from a Rs 10 million loss in the first quarter of FY’10.

Source: Indiantelevision.com

MUMBAI/NEW DELHI: On 31 March, Wire and Wireless (India) Ltd. ended its only Headend-In-The-Sky (HITS) service in the country after making no impact on the market, sinking in losses of over Rs 1 billion.

Four months later, the scenario is no different and the technology that would have put digitisation on the fast track stands unused. Several multi-system operators (MSOs) have applied for a HITS licence but are not particularly enthused as they await a more comprehensive policy.

“We want the government to allow the DTH signals to be used for HITS. This would save the sector from duplication of transponder use. There are other issues on content and tariff that need to be addressed,” says WWIL CEO Sudhir Agarwal.

Allowing the download of DTH signals for HITS would mean that WWIL need not have a separate teleport and uplinking facility as the MSO can use the existing infrastructure of its sibling company Dish TV India, India’s leading direct-to-home (DTH) operator.

Digicable Network (India), which is being snapped up by Reliance Communications, is ready to jump into HITS if transponders are made available. “There are no transponders. We have filed with ISRO. If we manage to get transponders, we will get into the HITS bandwagon,” says Digicable MD and CEO Jagjit Singh Kohli.

RComm runs a DTH service under the Big TV brand. The company has agreed to buy Digicable in an all-stock deal and in the new entity it would house its DTH, IPTV and broadband business as well.

“We need more clarity on the transponder issue, content policy and tariff order,” says the head of a leading MSO who did not want his name to be revealed.

The Telecom Regulatory Authority of India (Trai) has come out with a tariff policy for digital addressable systems, but MSOs want a differentiated pricing system for HITS.

The government has also indicated that the HITS scheme has not made any headway because Trai has not so far submitted its recommendations on policy issues.

While conceding that no operator is providing HITS services in the country, the Information and Broadcasting Ministry sources told indiantelevision.com that Trai had on 18 March been asked to examine policy issues following representations from MSOs.

Trai had submitted a report on 21 July but this covered only tariff regulations. This followed a request on 10 December last year to Trai to revisit the interconnection regulations, tariff orders and quality of service regulations in the light of the HITS policy announced by the government.

Dish TV India, which holds a HITS licence, had, in a representation on 3 March this year, raised the issue of absence of any tariff regime due to which broadcasters and content providers had either refused to provide content or were asking exorbitant amounts.

The downlinking guidelines had been last amended in December following the Government’s approval of the modification of policy guidelines for downlinking of television channels to enable broadcasters to provide their content to HITS service providers.

The clause 5.6 of the downlinking guidelines now provides “the applicant company shall provide Satellite TV Channel Signal reception decoders only to MSOs/Cable Operators registered under the Cable Television Networks (Regulation) Act 1995 or to a DTH operator registered under the DTH guidelines issued by Government of India or to an Internet Protocol Television (IPTV) Service Provider duly permitted under their existing Telecom License or authorized by Department of Telecommunications or to a HITS operator duly permitted under the policy guidelines for HITS operators issued by Ministry of Information & Broadcasting, Government of India to provide such service.”

Source: Indiantelevision.com

The Rs 21,000-crore cable and satellite sector is likely to improve profitability on the back of higher subscriber base, lower costs and improving average revenue per user.

The consolidation activity and the Telecom Regulatory Authority of India’s (Trai’s) recently-proposed norms on foreign direct investment in the cable and satellite sector could hasten corporatisation and make operations of service providers more profitable.

The sector, which is currently dominated by the over 50,000 local cable operators, suffers revenue leakage due to under-reporting of subscriber numbers by operators.

The organised sector, comprising multi-system operators (MSOs) and direct-to-home (DTH) players, is sitting on huge losses due to this leakage and high customer acquisition costs.

However, analysts say the recent acquisition by Reliance Communications (RCom) of India’s third-largest national MSO, Digicable, fund-raising by MSOs Hathway and DEN Networks, as well as the proposed norms will bring the much-need capital.

This will not only help national MSOs consolidate but also compete against DTH players, which are spending heavily to acquire new customers. In a short period, DTH players have notched up 20 million subscribers in a market of 110 million cable and satellite connections.

Faster growth for the organised segment
What is attracting players such as RCom and will be of interest to other foreign cable operators is growth of the organised sector. IDFC Securities estimates that while the overall sector will grow 14.5 per cent annually between 2009 and 2015 to Rs 48,000 crore, the share of organised players will grow from Rs 4,100 crore now to Rs 24,000 crore by 2015. If VAS (value-added services) revenues are included, the share will jump by 6.5 times to Rs 34,000 crore, it says. This means the share of organised players, which is currently less than 20 per cent, will grow to about 70 per cent. A large part of this is likely to come from the rise in the number of declared subscribers as well as DTH subscribers.

From 11 per cent now, the number of DTH homes is likely to move up by a factor of three, contributing over a third of total subscribers over the next six years. Going ahead, the six players in the DTH space and large national MSOs are likely to focus on profitability once their subscriber acquisitions stabilise and consolidation reduces competition.

Not yet there
Most players are making losses due to revenue leakage and high subscriber acquisition costs. DTH operators are among the heaviest advertisers as they compete against cable operators as well as other DTH players to attract subscribers by giving heavy subisidies. The six DTH players are estimated to be sitting on losses of Rs 7,000 crore and have so far spent Rs 15,000 crore on setting up operations.

However, as the subscriber base increases and higher average revenue per user (ARPU) from VAS services kicks in, they could see profits at the operating level in the next two years. Dish TV, the only listed player, for example, is already making profits at the operating level with a subscriber base of nearly six million. Similarly, among MSOs, DEN networks, with 10 million subscribers, is making profits at the net level. In addition to the higher base, VAS revenues from broadband, advertising, gaming, movie-on-demand and recording services are likely to improve ARPUs from under $3.8 to $6.3 over the next five years, adding to profits.

Den Networks
The country’s second-largest MSO has used the inorganic route to expand its network to 77 cities in just two years. It would use the Rs 360 crore it raised from an initial public offer some time ago to add 3.1 million digital connections to its existing base of 10 million, with a significant portion going towards digitisation. Given its execution capabilities, aggressive expansion and improved declaration of subscriber numbers by cable operators, its revenues are expected to grow 43 per cent annually to Rs 1,320 crore by FY13, believes IDFC Securities. Its syndication business under a joint venture with Star TV should add about Rs 600 crore to the kitty. The stock is expected to give over 40 per cent returns over the next one year.

Dish TV
While the company has raised about Rs 1,500 crore that it will use to scale up its six-million subscriber base to about eight million by 2013, it is likely to make profits at the net level only in the last quarter of FY2012. Though expenditure is coming down due to fixed content costs and higher subscriber base, subsidies, at Rs 2,500 per customer, are delaying profits in the most competitive DTH environment in the world. The well-funded balance sheet, expanded subscriber base and lower content as well interest costs are likely to help the company record a profit of Rs 136 crore for FY12. Expect over 35 per cent returns over the next one-and-a-half years from these levels.

Hathway Cable
The company is India’s largest MSO with a 30 per cent market share of the digital subscriber base. The Rs 480-crore initial public offer equity infusion should help the company aggressively expand its customer base and reach revenues of Rs 1,700 crore by FY13. Coupled with strong growth from the high-margin broadband business, Hathway’s operating profit is likely to grow five times to Rs 630 crore, with net profit reaching Rs 210 crore by FY13. Given its reach, the company is likely to be the biggest beneficiary of the move towards digitisation. At the current price, the stock is expected to give 40 per cent returns over a one-year period.

Wire and Wireless
This Zee group company wound up its head-end in the sky (HITS) operations and suffered revenue loss as its experiment with new technology failed to take off due to high content costs. Elara Securities expects the company to report higher profitability as its analog cable operations are positive at the operating profit level. The stock has corrected considerably due to the failed experiment with HITS and offers an opportunity as the company now focuses on expanding its digital cable business. Elara Securities has a set target of Rs 24, while the stock currently trades at Rs 14.

Source: Business Standard