Hathway targets 4.5 mn STBs in Phase II, need Rs 300 cr

The MSO may not dilute equity but use debt and vendor financing to fund, has already seeded 1.4 mn STBs in Phase II cities

Hathway Cable & Datacom, along with its joint venture partners, is expecting to cumulatively seed 4.5 million set-top boxes (STBs) in at least 25 cities falling under the phase II of government mandated digitisation. The company has already seeded 1.4 million STBs in consumer homes across these cities. The multi-system-operator (MSO) will need about Rs 300 crore for the same. Hathway may not resort to equity financing and the funding for the second phase will be preferably done via debt and vendor financing.

“We have already installed 1.4 million boxes in the cities falling under second phase, and we expect to seed 3.5 million additional boxes.” G Subramaniam, CFO at Hathway Cable & Datacom, told Business Standard.

He further said that as of end of September, Hathway’s consolidated net debt stands at around Rs 465 crore, including Rs 100 crore of vendor credit, and Rs 60 crore in cash on books.

The MSO has a presence in 25 out of the 38 cities where the analogue cable will cease and the switchover to digital addressable systems (DAS) is mandated by March 31, 2013.

Hathway expects to deploy over 2 million STB’s in the first phase of digitisation where it has already deployed 1.9 million boxes. “We have already deployed 1.9 million boxes in the three metros where we are present. We are expecting the number to go between 2 to 2.2 million. But the actual monetisation will only start in the course of the next four months. Similarly, the full impact of phase II on revenues will be captured in second and third quarter of FY 2013-14,” Subramaniam added.

The MSO believes that the phase II will be less challenging compared to first phase as the consumers have seen that government is firm on the deadline.

Talking about the additional services that Hathway provides and where it has has an edge over other MSOs and DTH players, Subramaniam said, “For any cable TV services provider, it is very important to be able to provide additional services to its consumers to be successful. We offer up to 20 HD channels. We are already a mature broadband services provider with 1.4 million homes passed by our broadband infrastructure. We have a rock solid back-end infrastructure. We were the first one to finalise contracts with all the broadcasters and rolled out the pack details. So in a way, we matched all the criteria in TRAI's guidelines.”

He however added that the final milestone in digitisation is to finalise the agreement with the local cable operators. “The LCOs were habituated to a certain kind of business model and to make the transition from and signing agreements is not that easy. We are well in progress in concluding satisfactory contracts with our LCO partners,” he added.