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Q3-2016: Ortel Communications' YoY revenue up 22%

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BENGALURU: The Bibhu Prasad Rath led regional cable television and broadband internet player Ortel Communications Limited (Ortel) reported YoY revenue (Total Income from Operations or TIO) of 21.8 per cent at Rs 48.03 crore in the current quarter (quarter ended 31 December, 2015, Q3-15) as compared to Rs 39.44 crore and 4.9 per cent QoQ growth as compared to Rs 45.79 crore.

The company reported PAT in Q3-2016 at Rs 3.89 crore (8.1 per cent margin) as compared to a loss of Rs 0.1 crore in Q3-2015 and 37.5 per cent higher QoQ PAT as compared to Rs 2.83 crore (6.2 per cent margin).

Ortel provides services in the Indian states of Odisha, Chhattisgarh, Andhra Pradesh, Madhya Pradesh and West Bengal.

Notes: 100,00,000 = 100 lakh = 10 million = 1 crore

The numbers mentioned in this report are standalone.

The company’s cable segment reported 17.3 per cent YoY growth in revenue at Rs 31.99 crore in the current quarter as compared to Rs 27.27 crore and 3.4 per cent QoQ growth as compared to Rs 30.93 crore. This segment reported 46.6 per cent YoY growth in operating profit of Rs 13.61 crore in Q3-2016 as compared to Rs 9.28 crore and 4.1 per cent QoQ growth as compared to Rs 13.08 crore.

Ortel’s broadband segment reported 16.3 per cent higher revenue at Rs 8.28 crore as compared to Rs 7.12 crore in the corresponding year ago quarter and 1.7 per cent more than the Rs 8.14 crore in Q2-2016. The broadband segment reported an operating profit of Rs 4.78 crore in the current quarter as compared to Rs 4.52 crore in Q3-2015 and 9.1 per cent higher than the Rs 438 crore in Q2-2016.

Ortel president and CEO Rath said, “I am delighted to share that our key strategy of LCO buyout is receiving huge response in our markets. Healthy addition to RGUs has led to strong growth of 38 per cent in bottom-line on a Q-o-Q basis. Given the strong pipeline of RGUs yet to be integrated, we are confident of improving upon this solid performance in the coming quarters.”

“Broadband business continues to do well and remains a key focus area for us. We are working towards delivering notable growth in subscriber base, which would further augment our performance and overall profitability,” he added.

“FY2016 will be one-of-the-best-years in the history of Ortel Communications backed by record RGU additions and solid visibility for LCO buyouts in the coming year. With more than 90 per cent subscribers on ‘last mile,’ we remain committed to this model and strongly believe it will create tremendous value for all stakeholders going forward,” Rath said.

Ortel’s YoY revenue generating units (RGU) grew 19 per cent to 626,475 as compared to 526,551 and increased 9.6 per cent QoQ as compared to 571,834 in Q2-2016.

Cable TV RGUs increased 19.3 per cent YoY in Q3-2016 to 558,766 as compared to 468,274 and increased 10 per cent as compared to 508,171 in Q2-2016.

Ortel’s YoY primary digital cable RGUs grew 33.9 per cent to 127,098 in Q3-2016 as compared to 94,926 and grew 8.3 per cent QoQ to 117,401. The company says that its Cable TV penetration stood at 23.7 per cent and penetration in the current quarter.

Broadband customers in the current quarter grew 16.2 per cent YoY to 67,709 as compared to 58,277 and grew 6.4 per cent QoQ as compared to 63,663.

Ortel reported a slight drop in digital and analogue cable ARPUs in the current quarter. Digital cable ARPU in Q3-2016 was Rs 181; in Q3-2015 it was Rs 186 and Q2-2016 it was Rs 183. Analogue cable ARPU in Q3-2016 was Rs 141, in Q3-2015 it was Rs 147 and in Q2-2016 it was Rs 143. Broadband ARPU in Q3-2016 was higher at Rs 396, while in Q3-2015 it was Rs 394 and in Q2-2016 it was Rs 395.

Cable Subscription, Connection and Channel carriage fees

The company’s cable subscription fees in Q3-2016 increased 6.5 per cent to Rs 21.2 crore as compared to Rs 19.9 crore and was 3.2 per cent more than the Rs 20.6 crore in Q2-2016. Connection fees increased 32.7 per cent to Rs 1 crore as compared to Rs 0.70 crore and increased 33.8 per cent as compared to Rs 0.7. Channel carriage fees in the current quarter increased 48.3 per cent to Rs 9.8 crore as compared to Rs 6.6 crore in Q3-2015 and increased 1.4 per cent as compared to Rs 9.7 crore in Q2-2016.

Let us look at the other numbers reported by Ortel:

Total Expenditure in Q3-2016 increased 16.2 per cent YoY Rs 39.78 crore (82.8 per cent of TIO) as compared to Rs 34.24 crore (86.8 per cent of TIO) and was 2.8 per cent more than Rs 38.72 crore (84.6 per cent of TIO) in Q2-2016.

The company’s programming cost in the current quarter increased 9.7 per cent to Rs 9.1 crore as compared to Rs 8.3 crore in Q3-2015, but declined 3.3 per cent as compared to Rs 9.44 crore in Q2-2016.

Bandwidth cost in Q3-2016 increased 25.4 per cent to Rs 2.1 crore as compared to Rs 1.7 crore and increased 9.1 per cent as compared to Rs 1.92 in Q2-2016.

Employee Benefits Expense in the current quarter increased 31.6 per cent to Rs 5.7 crore as compared to Rs 4.3 crore in Q3-2015 and increased 0.6 per cent as compared to Rs 5.64 crore e in Q2-2016.

Lower interest costs

SREI Equipment Finance Limited, the largest lender of the company, extended a prompt payment rebate (PPR) of one per cent on the company's borrowings with effect from 1 October, 2015. This is in addition to the earlier rebate of 0.75 per cent, which would bring down the effective interest rate to 14.25 per cent.

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