DTH players may get large share in last phase of digitisation

As, fragmented market will not be profitable for cable operators

The direct-to-home players are expected to get a big share of the digitisation market in the phase IV areas as the fragmented market will not be profitable for cable operators, says rating agency ICRA.

"DTH players are expected to take a lead in Phase IV markets as the catchment area (less than 15,000 households) in these markets remains highly fragmented and therefore unprofitable for cable operators to penetrate," it said.

The government has set a timeline to complete the digitisation in four phases. Phases I and II covering metros and 38 cities are already over.

The Phase III deadline (all urban areas) was December 31, 2015 and the Phase IV deadline (the rest of India) is December 31, 2016.

ICRA noted that while DTH players have been able to leverage their inherent technology advantage in cable dark areas of Phase III markets, Multi System Operators (MSOs) continued to gain a favourable market share in such areas which remained contiguous to Phase II markets such as Gurgaon and Noida in NCR and certain parts of Mumbai.

The rating firm believes the cable average revenue per user (ARPUs) in Phase III markets have the potential of growing from the existing levels of Rs 10-15 per subscriber per month to more than Rs 50 per subscriber per month.

"In the current fiscal, the revenue growth for MSOs will be driven by activation income. However, over the medium term, monetisation of the digital subscriber universe in Phase III markets offers high subscription revenue growth potential for players," it added.

At present, the implementation has been stayed for varying periods across Phase III markets of Maharashtra, Andhra Pradesh, Assam, Odisha, Sikkim, Telengana apart from Tamil Nadu where digital addressable system (DAS) implementation has been challenged since Phase I rollout.

Consequently, nearly 4.9 million households have further been removed from Phase III bringing down the total addressable population from 38.8 million households to 33.2 million, with the maximum impact being felt in West Bengal, Kerala, Goa and Jharkhand.