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| Dish TV: Wishing for more |
| Shobhana Subramanian / Mumbai Sep 26, 2009, 00:53 IST |
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The high growth of the DTH industry should help the operator post decent returns.
 With the Direct to Home (DTH) market now having nearly half-a-dozen big players, Dish TV’s market share is just above 40 per cent and its subscriber base 4.6 million. In fact, the company managed to net just a fifth of the total subscriber additions in the June 2009 quarter. However, the DTH market is expected to grow a compounded 37 per cent in the next five years, adding 10 million subscribers in 2010-11.
If the growth is driven by households in bigger cities, Zee should manage to get its fair share since it has the necessary distribution to fight local cable operators. Operating costs remain high — the average subscriber acquisition cost in the June 2009 quarter was Rs 2,487, just marginally lower than the Rs 2,505 in the March 2009 quarter.
Moreover, although major broadcasters are understood to have agreed to a fixed fee in return for content as opposed to that based on the subscriber base, the cost of content at an estimated 40 per cent of revenues is fairly high — in the June 2009 quarter, it was over 43 per cent. Also, while the average revenue per subscriber (ARPU) at Rs 142 crore was higher than Rs 132 in the March quarter, the monthly churn of 2 per cent is worrying. Dish TV needs to increase its ARPUs and reduce the churn.
With revenues expected to go up by about 55 per cent this year to Rs 1,150 crore, analysts believe the company could turn in an operating profit — the operating loss last year was Rs 179 crore while the net loss was Rs 480 crore. However analysts are also surprised that Dish TV has outstanding loans of around Rs 200 crore from a group company when the balance sheet remains leveraged. At the current price of Rs 45, the stock trades at a high 16 times 2010-11 EV/ebitda (enterprise value to earnings before interest tax and depreciation).
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