Dish TV not looking for equity funding in first phase of digitisation

MUMBAI: Dish TV, India‘s largest direct-to-home (DTH) operator with a net subscriber base of 9.6 million till 31 March 2012, will need a fresh funding of Rs 4.5 billion for digitisation in the first phase but has no plans to dilute equity at this stage.

The company has Rs 3.6 billion cash and bank funding will take care of the remaining amount.

"We have already paid for the 1.2 million set-top boxes because of government‘s digitisation mandate. We are expecting we would require around Rs 4.5 billion of fresh funding but we have cash and can have debt. We do not plan to dilute equity at this stage," said a source.

Dish TV‘s net debt has come down by Rs 1 billion QoQ to Rs 11 billion.

The company expects digitisation to trigger an upside of 3-3.5 million subscribers for the DTH industry this fiscal. The government has mandated digitisation in the metros of Delhi, Mumbai, Kolkata and Chennai by 30 June.

Dish TV expects the DTH industry to otherwise add 8-9 million subscribers in FY‘13. The company is adding 0.16-0.17 million gross subscribers on a monthly basis in the first quarter of this fiscal. It expects this to inch higher after the 30 June deadline for digitisation in the four metros.

Dish TV does not expect a decline in entry level pricing under digitisation as it expects multi-system operators (MSOs) to have a shortfall of set-top boxes (STBs) which will be taken care by DTH operators.

Gearing up for digitisation, Dish TV would increase its marketing costs from Rs 800 million to Rs 1 billion in FY‘13.

The company expects ARPU (average revenue per user (ARPU) to mostly stay constant this fiscal or go up marginally by 2-3 per cent. This factors in the impact on consumer bill of 2 per cent because of increase in service tax. However, from a medium-to-longer term perspective it expects ARPUs to trend upwards under digitisation.

Dish TV expects content costs to climb 12-13 per cent this fiscal as Media Pro is demanding a 10 per cent increase. "We are on negotiations with them," the official said.

The company‘s Ebitda margin in the fiscal-fourth quarter ended 31 March 2012 stood at 27.5 per cent, beating market forecast of 24.2 per cent, due to lower programming cost (down 6.9% QoQ). "This was due to renegotiation with two major sports broadcasters and we expect the lower rates to hold going forward as a percentage of subscription revenue."

Other operating costs jumped 35 per cent QoQ because transponder lease is pegged in dollar terms. Dish TV paid Rs 110 million to Isro on account of rentals for the full FY‘12 in the fourth quarter alone.

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