'A price war will expand the DTH market' : Anil Khera- Bharat Business Channel Ltd CEO

 Venugopal Dhoot sees opportunity in the direct-to-home (DTH) business as he plans to push Videocon's Plasma, LCD and premium TV sets.

As part of Dhoot's backward integration strategy, the consumer electronics giant will also manufacture the set-top boxes (STBs) in the Aurangabad factory.

Bharat Business Channel Ltd (BBCL), a separate company for the DTH venture, will have a war chest of Rs 10 billion over two years as it readies to enter a turf that will see intense price competition.

DTH in India, with players like Dish TV, Tata Sky, Reliance ADAG and Bharti, will be a low ARPU (average revenue per user), high volume game.

Dhoot, not new to price wars, believes that the DTH market will expand and his distribution network will provide the pipeline for him to mop up one million subscribers in the first year.

Heading the DTH venture is Anil Khera , who was earlier in charge of Videocon's Sansui and Kelvinator brands.

In an interview with Sibabrata Das, Khera talks about BBCL's plans to quickly penetrate the DTH market across the country.


Why does Videocon want to enter into the DTH business when the market has too many players and the race for subscriber acquisition is going to be led by a huge subsidy element?

The total number of television households is pegged at 125 million and is growing at 12-15 per cent. The DTH subscriber base, which is currently a little over six million, is expected to touch 15 million by 2010 with the entry of new players like Reliance ADAG, Bharti and us. The DTH market will expand rapidly and there will be enough space for all the players. India will become the world's largest pay-TV market by the stretch of numbers.

Is Videocon entering the market because it sees DTH as an integrated business model with its consumer electronics business?

We will be pushing our plasma, LCD and premium TV sets through our DTH service. Though we will firm up our offer plans closer to the time of launch, there will be some packaging done with subscription pricing, STBs and the TV sets. In many models, we will have in-built STBs. Unlike other DTH operators, we are a TV manufacturing company and will be making the STBs ourselves.

Will Videocon Industries have any holding in BBCL and how much is being pumped into the DTH business?

BBCL is a new company that has been floated for this purpose by the Videocon promoters. D2H+ is the brand name under which the service will be offered. We have already budgeted an investment of Rs 10 billion in this venture over the next two years.

Is BBCL in talks to rope in an equity partner?

No comments at this stage.

How many subscribers are you targeting in the first year and at what ARPUs (average revenue per user)?

We are looking at one million subscribers. We will be a premium service and expect our ARPUs to be Rs 200 in the first year.

'We will be pushing our plasma, LCD and premium TV sets through our DTH service. Unlike other DTH operators, we are a TV manufacturing company and will be making the STBs ourselves'

At what subscriber and ARPU level will BBCL break even?

We expect to break even faster than expected because of our backward integration model. We will be manufacturing STBs and have strong distribution skills. The market will also expand better than expected due to competition from so many players.

Aren't you entering at a time when the price war will be at its height as Reliance and others launch their service?

There will be a price war. That is when the market will also expand.

Will Videocon manufacture STBs only for BBCL?

Videocon has a strong manufacturing background. It will be manufacturing the STBs at its Aurangabad factory with the Korean technology. The STBs will be supplied to BBCL. Already 50,000 boxes have been manufactured.

When will you launch and how many channels will be on offer?

We will launch by October-end. The end-to-end instrument testing will happen in a week's time. We will then conclude the date for friendly users test. We will start with 200 channels. We will have a range of packages available to our customers - from basic to the family and premium range. We will offer choice to the customers and will cater to the entire demographic pop strata, including the regional flavours.

What is the differentiating content BBCL will offer to mop up subscribers?

We are working upon many customer friendly schemes which we will announce when the commercial launch is about to happen. We are working upon few unique channels. We will also have a HD ready platform which would be bundled with the offers.

How many Ku-band transponders have been booked and on which satellite?

We have taken six Ku-band transponders on SingTel's ST-1 satellite. We are using MPEG-4 compression technology and will be able to pack in more channels per transponder. Our encryption technology is from Irdeto. The uplinking centre is at Greater Noida.

What is the call centre facility being created?

We will be having a multi-lingual 24-hour call centre based at NOIDA/Gurgaon initially. Later we will have one each in the region of South as well as West.

The telcos feel that they have IPTV plans and DTH will complement that growth. What is the synergy Videocon sees in the DTH business?

We have been associated with consumer durables for over two decades and have a deep understanding of the viewing experience that a consumer seeks. We will drive penetration across the country soon.

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