Fixed billing model to help boost MSOs revenue: Report

The shift to fixed billing model by multiple system operators (MSO) could resolve the collection inefficiencies faced by them, which is leading to rising write-offs, according to India Ratings and Research (Ind-Ra).
The fixed billing model will mean MSOs will collect a fixed fee from the local cable operators (LCOs), immaterial of the amount collected from the subscriber.
"This will help address the issue of delays in payments and non-payments by subscribers and lead to a business to business (B2B) billing rather than the business to customer (B2C) billing," the ratings agency said.
Digitisation was expected to improve the profitability of MSOs, however, slower-than-expected rise in net realisation from LCOs has hurt their profitability.

However, paying and non-paying subscribers still cannot be determined in the digitised regime and resistance from LCOs for revenue sharing remains.
The ownership of customers continues to remain with LCOs.

Hence, MSOs' collections continue to remain lower than anticipated," it said.
The agency believes that a fixed billing may also lead to reduction in the receivable days, write-offs and provision for doubtful debts which has widened in the last three years.
The three listed players -- Hathway Cable and Datacom, Den Networks and Siti Cable Network have seen an average increase in the cumulative receivable days to 123 days in 2014-15 from 88 days in 2011-12.

While, the cumulative write-offs and provision for doubtful debts for all three is around Rs 620 crore indicating collection inefficiencies.
The agency observed that some of the national MSOs have started working toward the fixed billing model and could be a positive for the overall business profile of MSOs.