Lower activation fees, new businesses make Den Networks post a subdued result, low PAT for Q1-2015

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By Tarachand Wanvari Posted on : 13 Aug 2014 11:52 pm

BENGALURU: Den Networks Ltd (Den Networks) reported almost flat q-o-q result in Q1-2015. The company reported a slight drop in consolidated Total Income from Operations (TIO) in the current quarter at Rs 298.81 crore, down 1 per cent as compared to the Rs 301.86 crore in Q4-2014 and 11.2 per cent higher as compared to the Rs 268.70 crore in Q1-2014. Activation revenue dropped by Rs.47.5 crore in Q1-2015 as compared to the corresponding year ago quarter.
 
The company says that Operational Revenue (excluding Activation Revenue) grew by 35.4 per cent y-o-y; subscription revenues grew by Rs 71.25 crores (82.7 per cent) y-o-y. The breakup of revenue from operations for Q1-2015 is: Subscription Rs 146 crore; placement revenue Rs 116 crore; digital activation revenue Rs 20 crore and other operating revenue of Rs 3 crore. Another breakup of revenue is revenue from cable Rs 284.6 crore, broadband revenue Rs 1 crore and soccer revenue-nil.
 
Den Networks EBIDTA before other income in Q1-2015 fell 16.6 per cent to Rs 57.16 crore from Rs 68.57 crore in Q4-2014 and was 29.4 per cent lower than the Rs 80.94 crore in Q1-2014. The decline of Rs 23.78 crore (29.4 per cent) y-o-y comprises largely of losses on account of launch of broadband and soccer (Rs 12 crore) and lower activation revenue in cable business by Rs 42.75 crores.
 
Notes:  100,00,000 = 100 lakhs = 10 million = 1 crore
 
The company’s PAT in Q1-2015 at Rs 1.12 crore (0.4 per cent of TIO) which was about one ninth of the Rs 10.05 crore (3.3 per cent of TIO) in the immediate trailing quarter and also about one ninth of the Rs 10.15 crore (3.8 per cent of TIO) in Q1-2014.
 
Let us look at the other numbers reported by Den Networks for Q1-2015
 
Den Networks total expenditure in Q1-2015 at Rs 284.93 crore (95.4 per cent of TIO) was 5.9 per cent more than the Rs 269.18 crore (89.2 per cent of TIO) in Q4-2014 and was 24 per cent more than the Rs 229.69 crore (31.6 per cent of TIO) in the corresponding year ago quarter.
 
One of the major components of total expenditure is content cost in the case of Den Networks. The company paid Rs 106.42 crore (35.6 per cent of TIO) towards this expense head in Q1-2015, which was 5.5 per cent more than the Rs 100.85 crore (33.4 per cent of TIO) in Q4-2014 and was 25.2 per cent more than the Rs 85.01 crore (31.6 per cent of TIO) in Q1-2014.
 
Another major expense head is operational, administrative and other costs (admin cost). Den Networks admin cost in Q1-2015 at Rs 106.77 crore (35.7 per cent of TIO) which was 4.8 per cent more than the Rs 101.88 crore (33.8 per cent of TIO) and was 26.5 per cent more than the Rs 84.41 crore (31.4 per cent of TIO) in Q1-2014.
 
Based on the new accounting norms for calculating depreciation, the net effect is a higher depreciation of Rs 1.48 crore, which has resulted in a lower PAT in the current quarter.
 
The company says that it has deployed 2.7 lakh set-top boxes in the current quarter.
 
Den, through its wholly owned subsidiary – Den Soccer Pvt Ltd, has been awarded the team rights for Delhi - its home town. The team is named ‘Delhi Dynamos FC’. ISL is founded by IMG Reliance and Rupert Murdoch’s Star Group, under the aegis of All India Football Federation (AIFF). The inaugural season of the League is scheduled to begin in October, 2014.
 
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