Ortel to expand to new geographies, eyes one million RGUs by 2017

Ortel Communications, cable television and broadband provider in eastern India, aims to almost double its revenue generating units (RGUs) to a million by March 2017, up from the existing 530,111 units.

The Bhubaneswar-headquartered company is spread across 48 towns in Odisha, Andhra Pradesh, Chhattisgarh and West Bengal. It plans to soon foray into Telengana and Madhya Pradesh.

“We foresee an even addition of new RGUs from Odisha and the other emerging markets. We continue to maintain a dominant position in our core market, Odisha, while witnessing strong traction in our emerging markets of Chhattisgarh and Andhra Pradesh. With a local cable buyout strategy, along with ongoing efforts towards achieving healthy organic growth, we are confident of achieving our target March 2017,” said Bibhu Prasad Rath, president and chief executive officer, Ortel ommunications.

The expansion plan over the next two years is estimated to cost Rs 250-300 crore. It hit the capital market in March and raised Rs 108 crore through  an Initial Public Offer of six million equity shares at Rs 181  a share.

A major part of the expansion cost will be met from IPO proceeds. While the equity part in the new investment will be around Rs 100 crore, the residual funding would be a mix of debt and internal accrual.

Besides, deeper penetration in existing markets and entry into new regions, Ortel’s strategy would be underpinned by increased penetration of digital television services, rise in broadband subscribers, expansion through buyout of network equipment, infrastructure and subscribers of local cable operators and leasing of fibre infrastructure to corporates.

Total revenue in the state moved up 21 per cent in 2014-15 to reach Rs 146 crore, mainly on the back of expanding RGUs. Increase in channel carriage fees and infrastructure leasing also contributed to the company’s topline growth. Its Ebitda (earnings before interest, taxes, depreciation and amortisation) surged 44 per cent to Rs 60 crore due to robust growth in operating margin.

Ortel was the only listed broadband service provider to log profit after tax (PAT) in 2014-15. It posted Rs 6 crore PAT in 2014-15, while listed peers — Hathway Cable, Siti Cable and Den Networks suffered losses.

It signed network buyout deals with 40 last-mile operators with RGUs of 17,500 in April this year.

Ortel has also completed trial of DOCSIS (Data Over Cable Service Interface Specification) 3.0 technology and intends to roll out the services soon. DOCSIS 3.0 is capable of providing broadband services at high speed.

"We are happy to launch mega speed broadband services of up to 50 Mbps on DOCSIS 3.0 technology. This will redefine the consumer experience of internet usage. The company plans to actively deploy DOCSIS 3.0 modems to deliver impressive internet surfing experience to its subscribers", said Rath.