Communiqu from the MD
As we enter FY 2017-18 optimism about the India's growth story is at its peak. Indianeconomy is picking up pace and offering a glimpse of its true potential.
Current government has the strongest mandate in 30 years to deliver reforms that canresuscitate the Indian economy and deliver sustainable growth for the future. AsGovernment prepares India's passage to the future Digital India initiative is going to bea key enabler for this journey. With a clear vision the present government is pushingahead the Digital India initiative to transform the country into a digitally empoweredsociety and a knowledge economy.
FY 2016-17 for Hathway was all about investing in world-class digital infrastructure totake advantage of opportunities unleashed by Digital India and build a bigger strongerand more profitable business for the long term.
I would now like to share some specific step taken towards this transformation journey
As of closing business hours on March 31 2017 we have carved out our Cable Televisionbusiness (Cable TV) into a wholly-owned subsidiary Hathway Digital Private Limited [HDPL].(f.k.a. Hathway Datacom Central Private
Limited) through slump sale. Broadband business and Investment in GTPL HathwayLimited along with Investment in various other joint venture remains with your Company. Iam happy to share that all groundwork for the demerger has been smoothly completed. Thisnew structure allows us to invest more aggressively in high growth high profit broadbandbusiness and in parallel facilitate HDPL to focus on monetisation of Investment done indifferent phases of Digital addressable system (DAS) and undertake significant costoptimisation initiatives.
CABLE TV - PHASE III & IV DIGITISATION:
During the year we have seeded close to 2 Mn set top boxes (STBs) and as on year-endwe have 6.3 Mn STBs in Phase III & IV areas. We are proud to contribute towardsdramatically improving consumer TV viewing experience in these markets through enhanceddigital content and new-age packaging. Consumer satisfaction in these markets is very highand we have started monetising this investment and the same will be major growth driverfor FY 2017-18.
CABLE TV - "HATHwAY CONNECT" JOURNEY:
As cable TV industry is going through multiple challenges from differentdimensions-changing regulatory landscape technology disruptions and increasedcompetition Hathway Connect along with improved packaging aligned to the evolvingconsumer needs is the perfect recipe for reinventing and reimagining rules of engagementin cable TV. It gives consumers choice to select bouquet and la carte channelsaccording to their needs. For LCOs it is a tool to manage their operations better byremoving inefficiencies and provide complete transparency of transactions with Hathway.For Hathway it brings the Company one-step closer to the consumer. Hathway is able to doconsumer level billing automatic dunning management and bring efficiencies incollections.
We have made major strides in implementing Hathway Connect in FY 2016-17 and asignificant portion of our digital base is transacting through Hathway Connect portal.
GROwING BROADBAND HOME PASSES:
We continue to participate in opportunity to digitise India by investment in buildingadditional home passes. During the year we entered new markets of Kolkata Indore andChennai and overall built a high-speed broadband infrastructure and as on year-end have atotal home passes of 5.4 Mn. All the home passes in Chennai is provisioned with Gigabytespeed units at consumer homes.
BROADBAND NETwORK TRANSFORMATION:
During FY 2016-17 we have taken massive network upgrade for our broadband business tocater for existing and expected data growth. Based on these network improvements we areable to give all our consumers 25 Mbps base speed and 200 Mbps peak speed. Due to extracapacity of data centre we are able to increase monthly data limits of all consumers by200 GB. This was a necessary step for our broadband business to remain a disruptor ratherthan be disrupted.
CUSTOMERS ESPECIALLY MILLENNIALS AS CENTRE STAGE IN OUR BUSINESS STRATEGY:
Millennials also known as digital natives have grown up with smart devices &connectivity and sharing matter to them augmented by high speed broadband service. To meetthe expectations of these consumers we are undergoing our own digital transformationwhich will enable us to engage with our customers in ways that are more meaningful tothem. We have launched our new easy-to-navigate website which gives a seamless experienceon both the large screen and hand-held devices. Our newly launched consumer App forAndroid and iOS facilitates consumers to track their data usage and connect to ourcustomer service team without the need to reach out to our call centres. It alsofacilitates one click payment and auto renewal for ease of payment. We have also steppedup our efforts on digital and social media marketing to reach our consumers in anon-intrusive manner and convey strongly our proposition of best value for money in marketon speed data limits and pricing.
BUSINESS ExCELLENCE AND COST OPTIMISATION:
FY 2017 was a period of relooking at every aspect of the business functioning andprocesses. We have used technology to remodel many processes and increase efficiencies ofother processes as well. Journey on right-sizing various functional units as per changingexternal environment has also started. Complete results of these actions are expected inover the coming 6 to 12 months.
Looking ahead our focus will be on profitable growth and positive cash flows and thisperspective shall guide all our actions across business operations. Strong emphasis hasbeen placed on technology to upgrade business excellence; customer-centricity along withcost optimisation enables us to look up to the future with confidence.
I firmly believe 5 years of hard work on digitisation of cable TV business has finallystarted showing results on ground in terms of revenue and EBITDA growth. Imminentmonetisation of subscription revenue in Phase III & IV markets will be one moreaccelerator for this business. Our cable TV business has now more opportunities for growththan at any point in its history. Consumers are demanding more of best content on theirterms be it live on the main television set at home or on-demand content being offered byvarious
OTT players. However daily viewing to television remain high and more importantlyconsumers continuously want to be entertained on the big screen. Due to the largebroadband footprint Hathway is in a unique position to take advantage of this convergenceof linear TV and OTT. We still have 3 Mn consumers in our cable TV universe in metro andmini metros who are yet to take our broadband services giving us substantial headroom forgrowth.
As we look ahead into the future of broadband business we have exciting opportunity tohelp accelerate digital India mission. We will continue to invest heavily in high-speedfibre broadband and Gigabyte speed network roll out. Strong cash flows in broadbandbusiness allows us to fund this expansion through internal accruals. Growth of broadbandcustomer base with focus on quality acquisition and going deeper in current geographieswill remain our prime focus.
We expect the collective impact of various growth initiatives to continue scaling up inFY 2018 and helping us accelerate profitable growth. I have never felt more optimisticabout where we are going.
I would like to thank our employees as well as extended partners and other stakeholdersfor their hard work and commitment in this critical phase of our growth journey.
Finally I thank you for your continuing guidance trust and support.