Demonetisation hits Dish TV numbers for Q3-17


BENGALURU: Indian direct to home (DTH) company Dish TV India Limited (Dish TV) has reported just 3.3 per cent increase in subscription revenue for the quarter ended 31 December 2016 (Q3-17, current quarter) as compared to the corresponding year ago quarter (quarter ended 31 December 2015, Q3-16). Total Income from operations (TIO) in the current quarter actually declined three per cent as compared to Q3-17.

Further, despite the sunset dates for DAS phases III and IV quickly approaching, the company could add just 220,000 subscribers (net additions) in the current quarter as compared t0 317,000 (net additions) in Q3-16. Dish TV says that it closed the current quarter with 1.53 crore net subscribers.

In its earnings release, Dish TV says that only 30  of its subscribers made payments by digital means until demonetisation day ? 8 November 2016. CMD Jawahar Goel explained further, ?Limited cash supply made people defer their DTH recharges by a few days or weeks depending on the urgency of other basic necessities. The impact was stronger in the second tier and below towns and cities as most of the economy in these areas runs on cash. Our subscription revenues during the quarter could have been higher by around 8 per cent in a non-adverse scenario. Lower growth eventually resulted in lower average revenues per user as well.?

The company says that the fiscal third quarter being the period of festivals is generally the largest contributor to new subscriber additions during the year. Demonetization however impacted Dish TV?s new subscriber additions also with the company recording an estimated 8-10 per cent lower subscriber adds during the quarter.

Goel said further, ?Subscribers as well as trade partners were extended temporary credit facilities basis their past transactions pattern. Subscriber awareness drives to promote alternate methods of payment were run both on the ground and on screen in addition to various other initiatives. Looking at the brighter side of it, demonetization does promise an eventual less-cash dependent population that should use online payment interfaces over cash for DTH recharges. That?s going to be a boon for the DTH business.?

Goel is optimistic about the future. He said, ?Though demonetization has led to an initial distress, it also will result in certain structural changes that are going to benefit the economy in the long run. As far as our business is concerned, the effect has already started coming in. As online payment transactions, credit cards and a less-cash society become buzz words today, we are happy to note an increase in our online transacting subscriber base from 30 percent to around 38 percent with around 22 digital wallets and the like being integrated with the company. Every online recharge transaction vis-?-vis EPRS based transaction implies savings on recharge commissions paid by us.?

Let us look at the numbers reported by Dish TV for Q3-17

As mentioned above, subscription revenue in the current quarter increased 3.3 percent to Rs 692.10 crore from Rs 669.90 crore. TIO declined 3 percent to Rs 747.98 crore from Rs 771.48 crore.

Profit after tax (PAT) declined to almost a third (declined 61.0 Percent) to Rs 26.68 crore (3.6 percent margin ? of TIO) in Q3-17 from Rs 68.49 crore (8.9 percent margin) in Q3-16. EBIDTA in the current quarter declined 6 percent to Rs 249.51 crore (33.4 percent margin) from Rs 265.45 crore (34.4 percent margin).

Total Expenditure in Q3-17 increased 1.8 percent year-over-year (y-o-y) to Rs 664.04 crore from Rs 652.33 crore. Programming/content and other costs increased 6.2 percent y-o-y to Rs 220.10 crore in the current quarter from Rs 207.31 crore.

Employee Benefits Expense in the current quarter increased 25.2 percent to Rs 36.12 crore from Rs 28.85 crore. Other expenses in Q3-17 increased 9.7 percent y-o-y to Rs 118.09 crore from Rs 107.68 crore. Other operating costs declined 36.6 percent in the current quarter to Rs 66.82 crore from Rs 105.35 crore in the corresponding year ago quarter.

Finance costs in Q3-17 increased 8.3 percent to Rs 59.1 crore from Rs 54.46 crore in the corresponding year ago quarter.

Commenting on the results, Goel said, ?We believe that the negative impact of demonetization is only temporary and that with a strong subscriber growth rate, tight control on costs, reasonably steady free cash flows and a healthy balance sheet we should deliver sustainable growth. The rollout of the Goods and Services Tax (GST), a hopefully favourable license fee regime and a revenue conscious cable industry should only add to the strengths of Dish TV going forward.?

Notes: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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