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Indiantelevision.com's Digital Edge

Dish TV promoters up stake to 80% after rights issue

By SIBABRATA DAS
Indiantelevision.com Team

(24 January 2009 10:00 pm)

MUMBAI: Dish TV promoters have lifted their stake to 80.15 per cent after having to subscribe to the rights issue in a tough market condition that saw the scrip of the DTH company trading below the issue price fixed at Rs 22 per share.

The promoters, who earlier held 57.94 per cent in the direct-to-home (DTH) company, had to cough out around Rs 3 billion in the first tranche.

"The promoters have increased their stake to 80.15 per cent and have put in around Rs 3 billion," says a source in the company.

Dish TV raised Rs 3.10 billion in the first tranche with marginal subscription coming from other shareholders, the source adds.

The Essel Group promoted DTH company is raising Rs 11.40 billion through the rights issue to mainly fund its subscriber ramp-up plan. The market leader plans to mop up three million subscribers during the FY'10 fiscal, taking its total base to eight million in a turf that it is being hotly contested between Tata Sky, Sun TV, Reliance ADAG's Big TV and Bharti's Airtel Digital TV.

Dish TV will raise the remaining Rs 8.30 billion in two equal tranches from the rights issue subscribers. The issue had been structured so that subscribers could pay in three tranches - Rs 6 per share (of the issue price of Rs 22) on application, Rs 8 per share after three months but within nine months from the date of allotment, and the balance Rs 8 after nine months but within 18 months.

Dish TV plans to pump in between Rs 8 billion and 11 billion in FY'10, depending upon the competitive pressures and the pace at which it is able to add subscribers.

The capital employed in FY'09 is Rs 9 billion and the target is to pocket 2.25 million subscribers during this one-year period, the source says.

Dish TV has a total debt of Rs 7.35 billion, out of which Rs 4.10 billion is from five banks. The promoter Group has lent Rs 3.25 billion, part of which Dish TV plans to pay back from the proceeds of the issue.

The customer acquisition cost for the first nine months of the current fiscal stands at Rs 2750, up from Rs 1920 in the previous year on account of rupee depreciation. The ARPU (average revenue per user) is at Rs 146, affected by the aggressive third-quarter customer acquisition drive when it sank to Rs 137. The DTH company expects the full-fiscal ARPU to settle down at Rs 150.

Dish TV's carriage income for the nine-month period is Rs 330 million. "Though we were targeting a carriage revenue of Rs 500 million this fiscal, we could fall short of this because of a slowdown in the market," says the source.