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How will DTH drive value in future?

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GOA: Thus far, DTH has not been able to create the kind of consumer base it rightly deserves. Reason being: DTH players have been faced with several obstacles including subscriber leakage on ground, high levels of cash burn and the perennial issue of satellite capacity. What then are the key ingredients required for DTH’s value creation story, going forward? Exactly the question this session tried to address.

Moderated by Vivek Couto, the panel comprised Videocon D2H CEO Anil Khera, Dish TV executive vice-president and strategy Gaurav Goel, MEASAT Vishal Mathur, Kotak Securities senior analyst Amit Kumar and Macquairie capital senior VP Ausang Shukla.

“The major challenge that we face is to correct pricing of STBs from Rs 1600-1700 to just Rs 400-500, thus preventing rotational churn,” voiced Khera.

Goel supported this problem adding: “The pre-paid model is tough, as the subscriber pays for let’s say only for two months in a year as the existence of analogue in 50-60 per cent households is still a hindrance and we end up having a loss in revenue.”

Addressing capacity and investment-related issues faced by DTH players, Tata Sky CEO Harit Nagpal said: “I am writing my own destiny and thus investing Rs 900 crore on the conversion of old MPEG-2 services to MPEG-4. We have already done it for a million subscribers and soon will look at changing it for six million more.”

The panel observes that the DTH sector will see positive development only once it stops chasing additional subscribers and looks at the bigger picture of catering to consumer needs instead. In the past three to four years, DTH players have realised that with more channel carrying capacity, their prices are also headed north and that will cater to better ARPUs.

Said Kumar: “The key issue to address is the pricing of packages and the fact that they are offering 200 channels now as compared to 80-100 channels earlier and still haven’t seen a change in their ARPUS.”

Shukla agreed: “The major problem with the DTH sector getting investments is that there hasn’t really been much growth witnessed in terms of either subscription growth or cash flow.”

Another revelation is how dealing with capacity is a major problem although there is demand for HD and Indians are easily influenced by the experience of watching a cricket match or their favourite movie in HD. With 4K technology coming into live events with FIFA, more than capacity, the need of the hour is having a back-up satellite.

“What Sun Network experienced in 2009 was a real sorry affair, as it witnessed a complete blackout because of satellite failure, that could have been avoided if it had a back-up satellite,” said Mathur.

Also, no thought has been given to other avenues like using a BSS (Broadcast Satellite Service) band along with the FSS (Fixed Satellite Service) band - which is already in use. The difference between the two is that even as FSS can carry channels between 14-17GHz, the BSS band can carry an equal number of channels on a 12 GHz signal.

Added Mathur: “The issue is that there are seven DTH players who among them share 70 transponders with each of them requiring eight to ten transponders.”

The panel felt that there has to be some logic behind the consolidation of platforms as there is only a 25 per cent churn and with consolidation, there will be a further reduction in the number of subscribers.

So the panel agreed that consolidation of DTH platforms is not the panacea for getting investors. Rather, they have to focus on catering to subscribers’ needs.

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