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Q3: Digitisation pushes up MSOs' subscription revenue

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MUMBAI: Transparency in subscriber numbers with the digitisation of cable TV services in 42 cities is translating into higher subscription revenues for multi-system operators.

The benefit of digitisation is still to fully reflect in revenues of MSOs as billing to cable TV subscribers is still to be completed in the 38 cities that were digitised in Phase II.

Digitisation has had an added impact on the MSOs financials. Their carriage or placement revenue earned from broadcasters is decreasing.

MSOs expect carriage revenue to rise as new channels get launched.

Carriage Revenue

Hathway Cable & Datacom’s income from placement of channels fell 14 per cent to Rs 73.6 crore in the third quarter ended 31 December, 2014. The share of placement revenue in Hathway Cable’s total revenues fell to 31 per cent in the third quarter from 41 per cent a year ago.

Den Networks too saw softening of its placement revenues to Rs 117.8 crore, down nearly 2 per cent from Rs 119.90 crore a quarter earlier. Den Network’s placement revenues a year ago are not available.

Subscription Revenues

Digitisation gains led Den Networks revenues to rise to Rs 105 crore in the third quarter, up 6 per cent from Rs 99.11 crore a quarter earlier.

The quarter-on-quarter increase in subscription revenues for Hathway Cable was sharper. Its subscription revenues rose to 74 per cent to Rs 119.1 crore in the third quarter from Rs 68.5 crore a quarter earlier.

Hathway Cable’s subscription revenues rose as it completed billing for a substantial percentage of its cable TV customers in the cities covered under the Phase II of digitisation. As a result, its average revenue per month per subscriber too has increased substantially, an analyst said.

Hathway Cable says with its focus on collections, the company has witnessed continued traction in the pace of subscription collections into January 2014.

SITI Cable Network saw its total revenues in the third quarter rise 42 per cent to Rs 177.3 crore from Rs 124.7 crore a year ago.

SITI Cable CEO V D Wadhwa says, “We gained further momentum in the third quarter of fiscal 2014.”

Direct-To-Home TV

Dish TV’s revenues rose 3% quarter on quarter to Rs 6,128 mn in the third quarter but its EBITDA fell 1.6% quarter on quarter to Rs 135.50 crore. The company’s operating profit was down as its content cost rose and selling, general and administrative expenses increased as it tapped benefits flowing from digitisation.

Dish TV added net 2,20,000 households in the third quarter taking its subscriber base to 11.2 million.

Analysts expect Dish TV to reap higher benefits of digitisation in Phase III and IV starting 1 October, 2014.

In the case of Bharti Airtel’s DTH business, the multiplier impact of increased customer additions and higher realisations during the quarter, pushed up revenues by 25.8 per cent to Rs 538.4 crore from Rs 428 crore a quarter earlier.

Leveraging economies of scale, EBITDA for the quarter increased to Rs 97 crore from Rs 14.7 crore a year earlier. Consequently, Airtel Digital TV’s EBIDTA margin improved significantly to 18.0 per cent in the third quarter from 3.4 per cent a year earlier.

During the current quarter, the company incurred a capital expenditure of Rs 110.90 crore in DTH services. The cash burn during the quarter at Rs 13.9 million was significantly lower Rs 120.40 crore a year ago.

Airtel DTH added 2,35,000 net subscribers in the third quarter to take its total subscriber base to 88,07,000. Its average revenue per user in the third quarter was Rs 207. 

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