DTH additions dip 35%, lower subscriber spend another worry

With a drop of over 35 per cent in subscriber additions, the fourth quarter of the 2009 fiscal delivered the lowest growth in new direct-to-home (DTH) customers in the five-player private market.

As opposed to an average gross addition of around two million in the first three quarters of the last fiscal, only around 1.3 million subscribers were added in the fourth quarter (January to March), said industry sources.

And average revenue per user (ARPU) has seen a decline of up to 50 per cent among the new users added in the fourth quarter.

2008-09 saw over 7.5 million new subscribers, the highest in any year since the first private DTH service was launched by Dish TV in 2003.

Currently, of the 13 million-plus DTH subscribers in the country, the Essel group’s Dish TV has the highest (five million-plus), followed by Tata Sky (3.5 million-plus), Sun Direct (3.1 million-plus), Reliance ADA Group’s Big TV (1.8 million) and Airtel Digital TV (numbers not declared). These numbers are based on the claims made by these companies.

Industry analysts say the dip in acquisition of subscribers is due to the economic slowdown impacting purchase decisions. A DTH connection is still considered an aspirational product.

As for the ARPU decline, the latest report of Media Partners Asia (MPA), an international media research firm, says ARPU in the DTH business remains low at Rs 150. However, among the new subscribers, the monthly fees has been only between Rs 70 and Rs 100. “This is not sustainable in the long term...the combined losses of the DTH industry for 2008-09 were $450 million,” said the MPA report.

DTH firms agree, but attribute the slow subscriber acquisition rate in the last quarter of 2009 as “normal”.

“Yes, as an industry, there was a dip. But it is normal after a bumper third quarter, where sales zoomed due to the festive season. In April, we are witnessing 25 per cent growth in subscriber acquisitions for Dish TV,” said Salil Kapoor, COO, Dish TV.

However, estimates on Tata Sky, the second-largest private operator, are less cheering. According to the industry, Tata Sky added a million subscribers between July and November 2008, but added only half that in the next three months.

When asked, Vikram Mehra, chief marketing officer, Tata Sky, said in a written statement: “As a company policy, we do not share our numbers. However, Tata Sky has experienced healthy growth and crossed the 3.5 million connections mark in March 2009.”

On declining ARPU among DTH firms, Mehra said: “We have seen a steady growth in ARPU this year, which could be attributed to (our) unique value-added services.”

Sun Direct, the regional DTH player that recently launched in North India, aims to add over 2.5 million net subscribers every fiscal. “The rate at which Sun Direct is adding new subscribers, it may soon become the second-largest player. However, its subsidy-per-connection is among the highest. That may dent its overall ARPU in the long term,” said an analyst who tracks the sector.