Dish TV records 11.2% revenue growth for Q1-2014; higher Arpu's, lower losses

BENGALURU: India's largest DTH services provider Dish TV India Limited (Dish TV) reported first quarter fiscal 2014 standalone operating revenues of Rs 578.4 crore, recording 11.2 per cent growth over the Rs 519.95 crore operating revenues it clocked during Q1-2013. Also, its Q1-2014 standalone revenues were higher by 4.1 per cent than the Rs 555.4 crore the company reported for Q4-2013.

Let's take a look at the other figures for Q1-2014

EBITDA of Rs 121.7 crore was lower by around 22 per cent for Q1-2014 as against EBITDA of Rs 156.6 crore the DTH provider reported for Q1-2013. EBITDA margin for Q1-2014 stood at 21 per cent. It had reported a 29.9 per cent margin for Q1-2013. However, Dish TV's net loss was down to Rs 30.4 crore as compared to Rs 32.3 crore in the corresponding quarter last fiscal (Q1-2013) and Rs 43.6 crore in the previous quarter (Q4-2013).

Dish TV's primary expenses include cost of goods and services, personnel cost, administrative cost, advertisement expenses and selling expenses. Expenditure at Rs 456.7 crore was significantly higher by around 25 per cent than the Rs 364.4 crore the company reported for Q1-2013 and 4.9 per cent more than the Rs 435.4 crore it had reported for the previous quarter (Q4-2013).

Dish TV's advertising expenses for Q1-2014 at Rs 30.7 crore (which were 5.7 per cent of revenues of Q1-2104) were more than double (127.4 per cent higher) the Rs 13.5 crore during Q1-2013, and 84.9 per cent higher than Rs 16.6 crore during Q4-2013. It's selling and distribution expenses during Q1-2014 at Rs 59.3 crore were also higher by 14.9 per cent than the Rs 51.6 crore during Q1-2013 and 2.9 per cent more than the Rs 57.6 crore in Q4-2103.

Dish TV saw a gain of around two lakh in net number of subscriptions during Q1-2014. It had added 5.04 lakh subscriptions during Q1-2013. Subscription revenues for Q1-2014 were up 15.9 per cent at Rs 528 crore as compared to Rs 455.6 crore during Q1-2013 and higher by 5.6 per cent than the subscription revenues in Q4-2013.

ARPU for the quarter increased 5.1 per cent to Rs 165 resulting in a 15.9 per cent y-o-y increase in subscription revenues. Dish TV reported a free cash flow of Rs 48.4 crore for Q1-2014 as compared with Rs 22 crore in Q4-2014 and Rs 65 crore for FY-2013.

Dish TV chairman Subhash Chandra said, "In an ever changing world, the Indian media industry is keeping pace. Digitisation, which happens to be the most talked about, has still a lot to achieve even in the digitized towns and cities. Though it is comforting to see the evolution towards a transparent distribution environment, the distribution industry needs to act fast to leverage the opportunity to weed out the long standing inefficiencies in the system."

"Too much focus on box seeding has diluted the addressability part of the digitisation mandate. In such a scenario, Dish TV's focus on quality additions is a counter-intuitive move which has started delivering encouraging results. The first quarter saw the company deliver strong free cash flows while maintaining healthy customer retention and investing in brand equity," added Chandra.

Dish TV managing director Jawahar Goel said, "In line with our expectations, pack price hikes and improved subscriber quality in the recent months resulted in a strengthened ARPU. On the expenses front, higher investment in marketing, brand building and seasonal sports driven content along with the impact of a weak rupee on dollar denominated costs, resulted in a sequentially flat EBITDA margin."

"We remain committed to add quality subscribers who would be value accretive to the business. Our successful initiation of a series of entry level price hikes, even in a not so perfect macro environment, demonstrate our pricing power and resolve to eliminate subsidies in the medium term. At the same time, we continue to expand our distribution network and consider ourselves amongst the best placed to reach out to customers who fit the bill. We are also making strong progress towards lining up additional transponder capacity to beef up our existing, industry leading bandwidth. We intend to leverage the additional capacity for distributing localised content as well as strengthen carriage revenues," said Goel.

Commenting on the persistent weakness in the rupee and its impact on the financials, Goel said, "A flagging rupee has been an industry wide concern since some time now. To contain further widening of gap between the cost of the consumer premises equipment (CPE) and amount realized from the customer due to rupee depreciation, Dish TV initiated an acquisition price hike of Rs 250 on 4th July. Sensing the need, other players in the DTH industry followed suit within the next few days."

"We are evaluating possibilities for improvement in hardware economics of CPE sourced from India, given a depreciating rupee. We have also been considering options with our overseas suppliers to commence production at a base in India," he added.

Talking about Dish TV's overseas ventures, Goel confirmed, "Work on Dish TV Lanka (Pvt.) Limited, the company's subsidiary, is progressing as per plan. Since it is going to be a zero subsidy model, it makes us all the more excited about the expansion."

With a sustained focus on strengthening the balance sheet, Dish TV says that it looks forward to retiring a significant portion of its outstanding debt. The company claims that it is well positioned, through its internal accruals, to repay approximately Rs 750 crore outstanding debt through the current fiscal.

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