Dish TV Q1 subscription rev up 8.1% as subscriber addition picks up pace

Direct to home (DTH) Dish TV’s subscription revenue jumped 8.1% to Rs 1489.3 crore for the quarter ended 30 June as against Rs 1377.1 crore in the trailing quarter driven by an uptick in subscriber additions to due to a heavy sports calendar.

Subscriber additions picked up speed during the first quarter with net additions of 301,000 subscribers due to a sports heavy programming calendar. 44% of all subscriber additions were High Definition (HD).

In total, the company said that HD subscribers form a promising 17% of the total net base.

The company further stated that Ramadan, on the other hand, moderated the additions in line with past trends. It also noted that Phase 4 of digitisation continued to dominate subscriber activations. The sheer number of households pending conversion in Phase 4 indicate sufficient growth potential for the industry going forward.

Dish TV said that the subscription revenue growth was driven by incrementally higher HD viewership, lower discounts at package levels and a price hike across a majority of recharge packages.

The average revenue per user (ARPU) for the quarter leaped to Rs. 214 from Rs. 201 in the previous quarter.

Dish TV India CMD Jawahar Goel said, “Price hikes initiated during the quarter were a result of some pricing power gathered over the months. It is a positive sign and should stand us in good stead in the year ahead. The first quarter often sets the pace for the full year. Our performance in the first quarter gives us the confidence to deliver in line with our expectations going forward.”

Meanwhile, the company’s net profit for the quarter ended 30 June has shrunk 78.4% to Rs 25.5 crore from Rs 118.2 crore in the trailing quarter ended 30 March.

However, the company’s EBITDA saw a Q-o-Q growth of 38.9% to Rs 556.8 crore compared to Rs 400.6 crore a quarter ago. EBITDA margin increased to 33.6%.

Operating revenue was up 8% to Rs 1655.6 crore compared to Rs 1532.4 crore. Expenditure was down 2.9% to Rs 1098.9 crore from Rs 1131.7 crore. Cost of goods and services was up 1.7% to Rs 884.1 crore as against Rs 868.9 crore.

The quarterly result includes consolidated financials of Dish TV and Videocon d2h. On 22 March 2018, Videocon d2h had merged into Dish TV India with the appointed date of the merger being 1 October 2017.

Therefore, the company said that the financial numbers for 1Q FY19 are not comparable with the corresponding period last year (1Q FY18).

Synergies at Play

With integration across functions getting almost complete, initial cost synergies materialised during the quarter. Backend, IT and infrastructure synergies were the key contributors to a 38.9% growth in EBITDA sequentially. The overall EBITDA margin jumped to 33.6% from 26.1% in the previous quarter.

“We remain positive on achieving the Rs. 5.1 billion synergies that we have envisaged from the merger for the current fiscal. Part of the estimated synergies are going to be due to a more rational programming cost. Our interactions with our broadcasting partners so far reinforce our belief in the strength of the new Dish TV platform,” said Goel.

The TRAI Tariff Order

With the TRAI Tariff Order coming into force on 3 July, the industry has a 180-day window to ensure its implementation on the ground unless it is challenged by any of the stakeholders.

Dish TV India sees the regulation to have the potential to minimise discriminatory pricing by ensuring a level playing field between cable and DTH platforms.

Goel said, “If implemented in letter and spirit, the Tariff Order should be beneficial for the entire industry. Though a lot of work may have to be done by individual stakeholders initially, the benefits shall accrue by way of a higher ARPU for the industry going forward.”

Dish TV was the first in the industry to partially and voluntarily roll out the provisions of the Tariff Order by offering a-la-carte channels to its subscribers at affordable prices.

A total of 2.4 million subscribers on Dish TV’s platform have so far opted for such paid a-la-carte offerings thus resulting in incremental revenues for the company.

During the quarter, Dish TV India Limited achieved the ISO 27001 Certification for its Noida and Greater Noida based facilities.

ISO 27001 is considered the Gold standard in information security. It sets out and describes the requirements and best practices for an Information Security Management System.

Macro Outlook and the Year Ahead

The IMD’s forecast of a normal monsoon augurs well for the economy at large and is likely to give an impetus to rural demand. Higher government spending on welfare schemes and development programmes in the run-up to the elections will trickle down to the end consumer. There are clear signs of robust consumer demand continuing and fortifying the Indian consumption story.

Dish TV India Group CEO Anil Dua said, “We have started a new inning and this year is going to be the year of change at Dish TV. Change for the good. Whether it is our systems and processes or our approach to sales, service, and marketing or for that matter our customer and vendor relationships or our products, everything is going to be viewed through the lens of excellence and efficacy. We believe that we are well placed for superior growth and profitability and that macroeconomic tailwinds will create conditions that will further favour the consumption of pay-tv entertainment of which Dish TV will be a natural beneficiary.”