Cable TV

Analysis: Ortel Q3 numbers take a hit

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BENGALURU: Despite a 6.5 percent year-over-year (y-o-y) increase in Total Income from Operations (TIO), the Bibhu Prasad Rath led regional cable television and broadband internet player Ortel Communications Limited (Ortel) reported a net loss for the quarter ended 31 December 2016 (Q3-17, current quarter) as compared to a profit after tax (PAT) reported for the corresponding quarter of the previous year (Q3-16). The company reported a net loss of Rs 2.78 crore in Q3-17 as compared to a profit after tax (PAT) Rs 3.89 crore in Q3-16 and a PAT of Rs 2.54 crore in the immediate trailing quarter Q2-17.

The company has been hit by various factors, two of the four being demonitisation and increased competition in broadband internet services. Though Rath did not name the competition during a telecom with www.indiantelevision.com, the first moniker that comes to mind when one speaks of competition in broadband in India is Reliance Jio. The company?s Q3-17 numbers indicate that it has lost 8.4 percent or 6,679 broadband subscribers and its broadband ARPU had declined quarter-over-quarter (q-o-q) to Rs 394 from Rs 406 in the immediate trailing quarter. Ortel closed Q3-17 with 72,503 subscribers as compared to 79,182 in Q2-17 and 67,709 subscribers at the end ofQ3-16.

The third reason was the steep decline in Ortel?s infrastructure and leasing business. Another reason for the loss was a higher provision for bad debts (an expense head) in Q3-17 ? this was Rs 8.33 crore in Q3-17 as compared to Rs 3.76 crore for the year ago quarter and Rs 6.61 crore in the immediate trailing quarter.

However, Rath informed that his company?s broadband subscriber base has already shown positive growth in January 2017 and that the improved broadband results for the final quarter should improve. Rath also revealed data consumption per user has gone up in Q3-17 by about 1 GB as compared to the previous quarter because of more packages being made available and lowering of data prices.

Since it went public, Ortel has generally been reporting profits, more so over the past six-seven quarters, and TRath said that he expected the situation to normalise and the return of net profits within a couple of quarters.

Company speak

In the company?s earnings release, Rath said, ?Our performance during the quarter was impacted due to a combination of factors which weakened some of our key operating parameters. In spite of this, we have demonstrated a healthy growth in revenues from both Cable TV and Broadband Business on a y-o-y basis both for Q3 and 9M-17. I am also happy to inform that our Business outside Odisha which turned

EBIDTA positive last quarter has remained so during this quarter.

Overall, we have demonstrated that a strong B2C focused last mile business model in our core market can be profitable and remain confident of replicating the same across newer markets. We continue to believe that this is a sustainable model as we can capture the entire revenue stream across the value chain.?

Cable Subscription numbers (revenue generating units ? RGUs?), ARPU

During the current quarter, the total subscribers (both cable and television) stood at 738,963 subscribers. Net addition in Q3-17 stood at 13,256.

Analog and Digital TV ARPU stood as Rs. 150 per month and Rs. 152 per month for Q3-17 and Q3-16 respectively. For the immediate trailing quarter, ARPU was Rs 153.

Broadband numbers have been mentioned above.

Let us look at the other numbers reported by Ortel

Cable TV revenue in Q3-17 increased 25 percent y-o-y to Rs 40 crore from Rs 32 crore in Q3-16, but declined 4.8 percent q-o-q from Rs 42 crore.

Cable TV Activation fees or connection fees in Q3-17 were more than 2.6 times at Rs 2.5 crore as compared to Rs 1 crore in Q3-16, but declined 40.8 percent q-o-q from Rs 4.2 crore.

Cable TV subscription revenue in Q3-17 increased 41.1 percent y-o-y to Rs 30 crore from Rs 21.2 crore in Q3-16 and increased 1 percent q-o-q from Rs 29.7 crore. Channel carriage fees in the current quarter declined 23.2 percent y-o-y to Rs 7.5 crore from Rs 9.8 crore and declined 7.4 percent q-o-q from Rs 8.1 crore.

Broadband services revenue in Q3-17 increased 5.7 percent to Rs 8.7 crore from Rs 8.3 crore in Q3-16 but declined 12.6 percent q-o-q from Rs 10 crore. Internet connection fees in Q3-17 declined 60.5 percent y-o-y to Rs 0.2 crore from Rs 0.6 crore and declined 50.8 percent q-o-q from Rs 0.5 crore. Internet subscription fees in Q3-17 increased 10.5 percent y-o-y to Rs 8.5 crore from Rs 7.7 crore but declined 10.6 percent q-o-q from Rs 9.5 crore.

Total expenses (TE) in Q3-17 increased 19.4 percent y-o-y to Rs 47.48 crore as compared to Rs 39.78 crore, and increased 7.3 percent q-o-q from Rs 44.37 crore.

Programming cost in Q3-17 were almost flat (increased 0.6) percent y-o-y at Rs. 9.18 crore as compared to Rs 9.13 crore and increased 6.3 percent from Rs 8.64 crore. Employee expenses during the current quarter stood 9.7 percent higher y-o-y at Rs. 6.32 crore as compared to Rs 5.76 crore, and increased 4.9 percent q-o-q from Rs 6.03 crore.

Note: The unit of currency in this report is the Indian rupee - Rs (also conventionally represented by INR). The Indian numbering system or the Vedic numbering system has been used to denote money values. The basic conversion to the international norm would be:

(a) 100,00,000 = 100 lakh = 10,000,000 = 10 million = 1 crore.

(b) 10,000 lakh = 100 crore = 1 arab = 1 billion.

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