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Should you dump stocks of broadcasters, DTH players post Trai regulation?

According to the new guidelines, customers will have a choice to select and pay for only those channels that they want to watch, instead of paying for the entire pack imposed by the DTH players.

Swati Verma  |  New Delhi 

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The Telecom Regulatory Authority of India's (Trai) latest order on broadcasting and cable services that came into force on February 1 is more about offering options to customers rather than being pocket-friendly, analysts say.

According to the new guidelines, starting February 1, customers will have a choice to select and pay for only those channels that they want to watch, instead of paying for the entire pack imposed by the direct-to-home (DTH) or cable TV operators.

Though analysts have welcomed the move as it will bring transparency and options for customers to choose a la carte channels or bouquets, they feel the customers may eventually end up paying more.

"If a customer wants to watch only six channels, then it is beneficial for her as she will pay only for those six channels. But, if one chooses five channels and out of that, four were already available in the existing pack and along with that they had an option of exploring, surfing multiple channels, what was bad in that," says an expert requesting anonymity.

IMPACT ON DTH/CHANNELS

Most analysts are of the view that there won't be any substantial decline in the companies'revenue as the move is subjective in nature. Instead, the new order may see the companies get more aggressive as regards their pricing structure and target more customers to increase market share.

Stock prices of most of the channels and operators have fallen sharply in the last one year. Going forward, these stocks may see a knee-jerk reaction once the new rules are in place, analysts say.

"The new rules will see average revenue per users (ARPUs) increasing; however, at the same time it will also increase the churn rate in the customers' base. The new regulation will be positive for DTH players in the long-term, but will hurt MSOs," says Sanjeev Hota, AVP Research at Sharekhan, by BNP Paribas.

"On the technical front, shares of Sun TV are trading under pressure and we expect a downside target for Rs 480 levels while Rs 15 levels for DISH TV for the short term ahead," said Dr Ravi Singh, head of research at Karvy Broking.

Among the lot, analysts remain bullish on Zee Entertainment despite the recent developments.

"We believe medium-to longer-term performance still depends on the strategic partner deal structure, which is still uncertain. We revise to Buy from Accumulate citing inexpensive valuations, with a new target price of Rs 490 from Rs 535 on 23x (from 25x) FY20E P/E — a slightly lower multiple after factoring in the uncertainty. Our earnings estimates remain unchanged," say analysts at Elara Capital.


Here's how stocks have performed in the last one year -

Company Name Date Closing price Date Closing % change
BAG Films & Media Ltd. 01-Feb-2019 4.44 01-Feb-2018 5.58 -20.43
Balaji Telefilms Ltd. 01-Feb-2019 89.30 01-Feb-2018 145.75 -38.73
Colorchips New Media Ltd. 01-Feb-2019 67.35 01-Feb-2018 395.00 -82.95
Den Networks Ltd. 01-Feb-2019 71.75 01-Feb-2018 106.75 -32.79
Dish TV India Ltd. 01-Feb-2019 24.40 01-Feb-2018 77.30 -68.43
Entertainment Network (India) Ltd. 01-Feb-2019 567.15 01-Feb-2018 721.05 -21.34
Hathway Cable & Datacom Ltd. 01-Feb-2019 32.00 01-Feb-2018 38.30 -16.45
Music Broadcast Ltd. 01-Feb-2019 298.50 01-Feb-2018 387.95 -23.06
New Delhi Television Ltd. 01-Feb-2019 35.00 01-Feb-2018 42.15 -16.96
Ortel Communications Ltd. 01-Feb-2019 4.40 01-Feb-2018 31.55 -86.05
Raj Television Network Ltd. 01-Feb-2019 50.65 01-Feb-2018 57.85 -12.45
Sahara One Media & Entertainment Ltd. 29-Jan-2019 19.45 01-Feb-2018 52.00 -62.60
Siti Networks Ltd. 01-Feb-2019 6.25 01-Feb-2018 22.55 -72.28
Sun TV Network Ltd. 01-Feb-2019 532.15 01-Feb-2018 1012.90 -47.46
TV Today Network Ltd. 01-Feb-2019 351.60 01-Feb-2018 452.65 -22.32
TV Vision Ltd. 01-Feb-2019 3.18 01-Feb-2018 20.80 -84.71
TV18 Broadcast Ltd. 01-Feb-2019 32.65 01-Feb-2018 59.70 -45.31
UFO Moviez India Ltd. 01-Feb-2019 247.50 01-Feb-2018 456.10 -45.74
Zee Entertainment Enterprises Ltd. 01-Feb-2019 356.50 01-Feb-2018 595.10 -40.09
Zee Media Corporation Ltd. 01-Feb-2019 13.14 01-Feb-2018 43.70 -69.93

First Published: Mon, February 04 2019. 07:33 IST
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