Hathway Cable generates profits courtesy digitisation in FY-2013

MUMBAI: It‘s obviously bearing the fruits of the government mandated digitisation of Indian cable TV and of being among the first movers in the sector. Hathway Cable & Datacom, which proudly claims that it is India‘s largest high speed cable broadband services provider on its website, has seen a remarkable turnaround in profits in Q4-2013 and in FY2013. It had posted net losses in the previous quarters. The results were posted after market hours this evening.

With 1.4 million two-way broadband enabled homes together with a subscriber base over 50 per cent of the total Indian cable TV broadband market, it was awarded as the best Indian MSO by‘s The Indian Telly Awards for its quality cable TV and broadband internet services earlier this month.

Let us look at the Q4-2013 financials as against Q4-2012

The cable TV services provider notched up total sales of Rs 231.18 crore in Q4-2013 as against Rs 135.46 crore in Q4-2012 - a phenomenal 70.6 per cent jump.

Expenses at Rs 186.88 crore in Q4-2013 grew when compared to Rs 139.30 crore in Q4-2012. Greater transparency in its operations, following phase 1 of digitisation, has resulted in it forking out more money to pay TV channels. Its pay TV channel costs have gone up to Rs 49.50 crore from Rs 38.79 crore in Q4-2012. Employee benefits have climbed to Rs 10.52 crore (Rs 7.68 crore).

What grabs our attention the most is the company‘s positive bottomline which is at Rs 28.27 crore as against a reported net loss of Rs 6.79 crore in Q4-2012.

Let us look at the Q4-2013 financials as against the preceding Q3-2013

Considering the quarterly trend, the top line (revenue) at Rs 231.18 crore witnessed a massive jump of nearly 50 per cent over Q3-2013‘s revenue of Rs 154.91 crore.

Expenses have surged to Rs 186.88 crore in Q4-2013 as against Rs 147.57 crore in the immediate preceding Q3-2013. Major contributors to this surge are attributed to pay channels costs which stood at Rs 49.50 crore (Rs 42.96 crore in Q3-2013).

Yet again Hathway‘s net profit of Rs 28.27 crore, as against a net loss of Rs 7.42 crore in Q3-2013 remains the most welcome of them all.

Let us look at the consolidated FY-2013 results as against FY-2012

Although it recorded net losses for three of the four quarters in FY-2013, Hathway Cable & Datacom has reported impressive overall results. Its revenues rose 12 per cent to Rs 1132.52 crore as against Rs 1012.12 crore in FY-2012. It tightened the screws on expenses allowing these to rise only 3.6 per cent to Rs 1024.74 crore (from Rs 988.74 crore in FY-2012).

Its profits from operations gallopped to Rs 107.78 crore in FY-2013 as against Rs 23.38 crore. And what‘s more it has reported a smiling net profit of Rs 15.90 crore as against a loss of Rs 49.18 crore in FY-2012.

The company appears to have been leveraging itself to fund digitisation in phase I as its borrowings have skyrocketed. Its long term borrowings have more than doubled to Rs 669.08 crore in FY-2013 from Rs 269.95 crore in FY-2012. It has resorted to higher short term debt during the year too, with the figure standing at Rs 76.18 crore on 31 March 2013 as against FY-2012 Rs 21.28 crore. Its current liabilities have also doubled from Rs 310 crore in FY-2012 to Rs 617.68 crore in FY-2013.

The company says that, in view of introduction of DAS, it along with other MSOs, is in the process of finalising fresh terms of revenue sharing with local cable operators through whom the cable services are rendered to the ultimate subscriber.

On August 2012, the Hathway stock was trading at Rs 173.12. It then moved up to Rs 300 in a matter of four months in December 2012. Following that the stock has been range-bounding between Rs 236 and Rs 276. It broke out to Rs 290 on 14 May 2013 only to fall back to Rs 269 on 23 May 2013. The Hathway stock closed today at Rs 275.05 as against the previous closing of Rs 273.10.

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