DTH

Q2-17: Videocon d2h top and bottom lines up

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BENGALURU: Last quarter, Videocon d2h was the second listed Indian DTH player to report a profit after tax (PAT), after the Essel group?s Dish TV that turned the numbers black last year. Taking that trend further, Videocon d2h reported PAT of Rs 6.32 crore (0.8 percent margin) for the quarter ended 30 September 2016 (Q2-17, current quarter). For the corresponding year ago quarter (Q2-17), the company had reported a loss of Rs 24.59 crore while for the immediate trailing quarter (Q1-17) the company had reported profit of Rs 2.66 crore (0.3 percent margin).

Videocon d2h reported 12.5 percent y-o-y growth in total revenue from operations for Q2-17 at Rs 776.16 crore as compared to Rs 690.08 crore and a 1.7 percent q-o-q growth from Rs 763.25 crore.

The DTH major also reported 15.5 percent year-over-year (y-o-y) growth in net subscriber numbers at 125.2 lakh for Q2-17 as compared to 108.4 lakh and a 1.9 percent quarter-over-quarter (q-o-q) growth from122.9 lakh. Monthly Average revenue per user (ARPU) in the current quarter increased to Rs 209 from Rs 201 in Q1-16 but declined by Rs 2 from Rs 211 in the immediate trailing quarter.

Subscriber matrices

Subscriber acquisition cost (SAC) in Q2-17 was higher at Rs 1,869 as compared to Rs 1,775 in Q2-16 but was lower than Rs 1,872 in Q1-17.

Subscriber monthly churn in the current quarter was 0.95 percent; in Q1-16 it was slightly higher at 1.19 percent, while in the immediate trailing quarter it was much lower at 0.49 percent.

DAS III and IV are sunshine periods for the television carriage industry. Activation revenues have been adding to the top lines and bottom lines of most of the players. Videocon d2h computed subscription and activation revenue in the current quarter increased 21.9 percent y-o-y to Rs 710.70 crore and increased 2 percent q-o-q from Rs 697 crore.

A look at some of the other metrics reported by Videocon d2h

Adjusted EBIDTA grew 38.3 percent y-o-y to Rs 260.41 crore (33.6 percent margin) from Rs 188.26 crore (27.3 percent margin) and grew 4.3 percent q-o-q from Rs 249.78 crore (32.7 percent margin). Videocon d2h reports that EBIDTA per subscriber has increased to Rs 71 in Q2-17 from Rs 59 in Q2-16 and from Rs 70 in Q1-17.

Content costs margin in Q2-17 has reduced to 38.7 percent as compared to 40.7 percent in the corresponding year ago quarter and was flat as compared  to the immediate trailing quarter.

Total expense in Q2-17 increased 5.2 percent y-o-y to Rs 684.29 crore from Rs 650.70 crore and was flat q-o-q as compared to Rs 684.53 crore.

Selling and distribution expense in the current quarter increased 22.4 percent y-o-y to Rs 60.7 crore from Rs 49.6 crore, but declined 5.2 percent q-o-q from Rs 64 crore.

Employee benefit expense in Q2-17 were 4 percent higher at Rs 31.5 crore as compared to Rs 30.3 crore in Q2-16 but were 2.2 percent lower than the Rs 32.2 crore in Q1-17.

Net finance cost in Q2-17 was Rs 71.7 crore; in Q2-16 net finance cost was Rs 80.2 crore and in Q1-17 it was Rs 75.9 crore.

Company speak

Commenting on the results and company outlook, Videocon d2h executive chairman Saurabh Dhoot, said, ?I?m pleased to report a terrific quarter with over 37% increase in EBITDA year on year, in spite of the previously announced increase in taxes which impacted ARPU. Our quarterly results performance is consistent with our five point strategy to 1) grow subscriber base, 2) enhance subscriber monetization, 3) focus on localization and premium services, 4) lead the market in technological innovation and 5) enhance operational efficiencies and improve margins. These imperatives are drivingour success at creating sustainable shareholder value.

?We are excited and fully prepared to seize the significant subscriber growth opportunity ahead of us through our leading distribution, customer  service and differentiated content offering, supported by a strong balance sheet,? added Dhoot.

?We achieved positive profit after tax and turned free cash flow positive during the current fiscal year, which we believe is a great achievement,? concluded Dhoot.

Speaking on the results, Videocon d2h CEO Anil Khera said, ?We are extremely excited with the business growth opportunities ahead of the company. We welcome the regulators? initiative to review and draft a tariff order that aims to create complete transparency in carriage and content deals and bring in commercial parity amongst distribution platforms.?

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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