Sun Direct bolsters network capacity with transponder addition from Measat

Direct to home (DTH) operator Sun Direct has increased its transponder capacity to offer more channels and services to its customers.

In FY19, the DTH operator added one more transponder to take its total transponder count to 13. Sun Direct uses 13 transponders out of which nine transponders are from Measat and four transponders from GSAT.

Sun Direct had added seven transponders including four from Measat and three from GSAT during FY18.

The addition of eight transponders in FY18-19 has enabled the company to increase the number of SD channels offered to around 300 channels from 256 channels earlier and offer 69 HD channels.

Sun Direct is also shifting to HEVC encoding as against MPEG 4 encoding used earlier which will help the company broadcast a higher number of channels within the existing bandwidth.

Care Ratings had recently rated the outlook for Sun Direct as “Positive” due to the addition of new transponder capacity. Sun Direct is expected to sustain the growth in its net subscriber base and offer a wide array of channels which may aid in improving ARPUs and thereby generate higher cash accruals in the medium-term.

The rating agency had stated that the outlook may be revised to “Stable” if Sun Direct is not able to generate envisaged cash accruals or if there is any adverse change in the regulatory or competitive environment.

Care had withdrawn the rating assigned to the term loan sanctioned by Syndicate Bank with immediate effect as the company has surrendered the aforementioned bank facility rated by us in full and there is no amount outstanding under the facility as on date.

It had also stated that the rating assigned to the bank facilities of Sun Direct TV Private Limited (Sun Direct), continues to derive strength from vast experience of the promoters in the media industry, the company’s growing scale of operations albeit concentrated towards South India and growth in activation income in FY18 (refers to the period April 1 to March 31).

The rating, however, remains constrained by elevated financial risk profile of the company on account of the accumulated losses in the past, continued dependence on external funding for procurement of Set-top-Boxes (STBs) in the medium term and increasing competition faced from its peers, DD Free Dish and other alternative technology platforms.

The total income of Sun Direct grew by about 9% year-on-year from Rs.1,215 crore in FY17 to Rs.1,372 crore in FY18 driven by growth in activation income.

Though customer acquisition has been healthy in the past, the company had witnessed high churn in the customer base mainly due to a lower number of channels offered. Sun Direct has been focusing its operations primarily in the Southern region with the share of South India in the net subscriber base high at around 98%.

While the company started generating cash profits from FY13, it continued to incur losses till FY16. The promoters were providing financial support to the company by infusing equity in the past. The company had accumulated losses of Rs. 2,706.75 crore and hence net worth continues to remain negative as on 31 March 2018.

During FY18, the company reported a net profit of Rs. 45.27 crore and going forward, Sun Direct expects to support the future capex (for the purchase of CPE) through internal accruals and external debt with no further dependence on promoter’s contribution.

Sun Direct is promoted by Kalanithi Maran who along with his wife Kaveri Kalanithi together holds 80% stake in Sun Direct. South Asia Entertainment Holding Ltd (SAEHL), a 100% subsidiary of Astro All Asia Networks Plc (Astro), holds the remaining 20% stake. Astro is a leading DTH operator in Malaysia.

Sun Direct started DTH TV services from December 2007, concentrating mainly in South India and expanded its services to the rest of India in September 2008.