Cable TV | Broadband - Hathway

Hathway Cable & Datacom Limited
Investor Presentation – December 2011
BSE : 533162 | NSE : HATHWAY | Bloomberg : HATH:IN | Reuters : HAWY.NS
www.hathway.com
1

Safe Harbor
The information contained in this presentation is only current as of its date. All actions and statements made herein or otherwise shall
be subject to the applicable laws and regulations as amended from time to time. There is no representation that all information
relating to the context has been taken care off in the presentation and neither we undertake any obligation as to the regular updating
of the information as a result of new information, future events or otherwise. We will accept no liability whatsoever for any loss arising
directly or indirectly from the use of, reliance of any information contained in this presentation or for any omission of the information.
The information shall not be distributed or used by any person or entity in any jurisdiction or countries were such distribution or use
would be contrary to the applicable laws or Regulations. It is advised that prior to acting upon this presentation independent
consultation / advise may be obtained and necessary due diligence, investigation etc may be done at your end. You may also contact
us directly for any questions or clarifications at our end. This presentation contain certain statements of future expectations and other
forward-looking statements, including those relating to our general business plans and strategy, our future financial condition and
growth prospects, and future developments in our industry and our competitive and regulatory environment. In addition to statements
which are forward looking by reason of context, the words ‗may, will, should, expects, plans, intends, anticipates, believes, estimates,
predicts, potential or continue and similar expressions identify forward looking statements. Actual results, performances or events may
differ materially from these forward-looking statements including the plans, objectives, expectations, estimates and intentions
expressed in forward looking statements due to a number of factors, including without limitation future changes or developments in
our business, our competitive environment, telecommunications technology and application, and political, economic, legal and social
conditions in India. It is cautioned that the foregoing list is not exhaustive This presentation is not being used in connection with any
invitation of an offer or an offer of securities and should not be used as a basis for any investment decision
Cable TV | Broadband
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India Opportunity for Cable TV
3

Cable TV : The Opportunity for addressability (Digitization)
Indian Population : 1.2 Billion (239 Million House)
TV Households (147 Million)
Pay TV (127 Million)
Others (20 Million)
DTH
(32 Million)
Analogue
(89 Million)
Digital Cable
(6 Million)
Source : MPA 2011
Cable TV | Broadband
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Subs in Million
Subs in Million
Subs in Million
2015 : World’s 2 nd largest Cable TV Market
300
200
100
216 223 231 239 246 254 261 268
127 134 141 148 155 162 169 175
70%
65%
60%
-
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
Total Household TV Household %
55%
200
150
100
72%
91
76%
102
81%
114
86%
127
90% 92% 94% 95%
149
158
166
139
100%
80%
60%
40%
50
20%
-
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
0%
Pay-TV Penetration (% of TV HHs)
Pay TV Subs
150
100
50
0
83 88 91 94 97 99 101 102
50
57
64
41
32
8
15
23
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
Cable / Digital TV DTH
Source : MPA 2011
Cable TV | Broadband
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Digitization Time Line of MIB
Phase I
Phase II
Phase III
Phase IV
4 Metro: Delhi
Mumbai Kolkata
Chennai
(Cumulative
Population : 36
Mn **) :
June-12
All 1 Mn + Cities :
(Cumulative
population : 70
Mn **) : Mar-13
All Urban areas
(Municipal
Corps/
Municipalities)
Sep-14
Rest of India :
Dec-14
Sunset date for analog cable across India : Dec-14
Source : MIB notification dated : 11 th November 2011
Cable TV | Broadband
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Mandatory Digitization – Finally to be a reality, soon!
● Digitization initiated in 2003
– Chennai digitized in 2003, southern parts of Mumbai, Delhi &
Kolkata digitized from 2007 onwards
●
Failed for 7 years due to
– LCO unwillingness, weaker MSOs and broadcasters
revenue model being ad dependent
●
Mandatory Digitization to be a reality soon
– Consumer demands better TV viewing experience
– LCOs forthcoming now because of real threat of DTH
– MSOs have grown in size through inorganic route and
raised funds through IPO, fund-raising for digitization
now possible
– Top 5 MSOs together pass through more than ~50% of the
analogue HHs
– Broadcasters Ad growth is stabilizing, focus on subscription
revenues as reach is established
●
Favorable regulatory environment
Cable TV | Broadband
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DAS : Favorable regulatory environment…..
Regulatory Impetus now provided…
Several recommendations & Incentives for Cable Companies to Promote Digitization
Increased Foreign
Investment
Recommended
increase in foreign
investment limit from
49% to 74% for MSOs
going digital
Others
* Supreme Court‘s interim order has capped content cost in digital platforms at 42% of
analogue platforms
* Recommended Income Tax Holiday till 31st March 2019 for companies that invest in
DAS
* TRAI has recommended waiver of Duties on Digital Headend Equipment & STB
* MSO/LCOs to be eligible for seeking Right of Way on a non-exclusive basis for
laying optical fibre / cable network. Process of laying intra-city cable inrastructure
would become easier
Source : TRAI
Cable TV | Broadband 8

Cable seen as the largest broadband delivery platform
TRAI announces National Broadband Plan –
• India's government plans to invest more than US$13bn to bring fixed-line broadband services
• The National Broadband Plan - submitted by the (TRAI) to the Department of Telecommunications (DoT) in
December—recommends a government investment of about Rs600bn (US$13bn) in a national open-access core fibre
network reaching all villages with a population of more than 500 people. Its target is to connect around 160m of India's
275m households to broadband services by the end of 2014.
• By the end of 2013, the TRAI expects network construction to be entirely finished. By the end of 2012, it is aiming for 75m
connections, and it wants this number to rise to 160m two years later, with 40% of connections based on wireless
broadband technology. At a cost of around US$11bn in rural areas and US$2bn in cities, the network is expected to
provide at least 10Mbps services to 63 cities, 4Mbps services to another 352 cities and a basic 2Mbps service to every
town and village with more than 500 inhabitants.
• TRAI Plan envisages the use of various technologies, with fibre-to-the-home (FTTH) and fibre-to-the-curb (FTTC)
expected to be dominant in cities and wireless technologies like EV-DO, Wi Max, HSPA and LTE deployed elsewhere.
• TRAI plans to build the network through a new government-owned holding company called the National Optical Fibre
Agency (NOFA). NOFA will be responsible for planning, building, operating and maintaining the network the country's
largest urban areas. A State Optical Fibre Agency (SOFA) in each state is to assume responsibility for the network
outside of the JNURM cities.
Source : TRAI
Cable TV | Broadband
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DAS : Relative SWOT over DTH
DAS has higher capacity (> 1k Channels)
Drive C&P
Lower SAC (Rs.1,575 Vs Rs.~2,800 for Dish TV)
No rainfall attenuation
Quick & Localized customers
services
Lower Marketing spends
DTH : 10% licenses fees
+ 5% Transponder costs
Better branding by DTH
No territorial limitation
-scale advantage goes to DTH
DTH : 100 % Prepaid Model
Cable : Dependent on LCO for last mile
Bundling with Broadband
(Triple Play Opportunity)
Localized content
VOD Vs NVOD
Inter active services
Well capitalized
– DTH players can be aggressive
Vertically integrated giants
– unfair competition
(Tatasky/Dish Tv/ Sun TV)
Synergy from other Business
(Airtel / VideoconD2H / Reliance TV )
Cable TV | Broadband
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Cable - the dominant and superior platform in India
Higher bandwidth / channel
capacity
• Current cable infrastructure can offer more channels in digital format
• Ability to offer VAS like VOD, PPV & HD Service
Ability to offer regionally
customised content
• No regulation prohibiting unique content from individual
headends
Potential for broadband cable
services
Local on-the-ground customer
service
Consistent signal quality
• Broadband over same cable infrastructure – not possible in DTH
• Quick response time
• DTH suffers from poor signal quality in adverse weather
conditions
Higher cost base for DTH
• License fee, transponder cost and higher subscriber acquisition
costs passed on to consumers
Cable TV | Broadband
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Hathway Cable & Datacom Limited
12

Hathway’s National Foot Print positions it best
Company Background
Promoted by the Raheja Group & News Corp.
Leading cable TV services provider
• Reach to c.8.7 million cable homes
• Delivers services in 140 towns and cities with
leading presence in key geographies
• Largest cable operator in India by paying
subscriber – C.1.8 million
• Largest provider of digital video
service – C.1.7 million subscribers
Leading cable broadband services provider
• c.1.4 million two-way enabled homes passed
•Highest market share (47%) with 392K subscribers
20 Digital HE’s positions Hathway well
Award winning customer service
• Named ―Best MSO‖ by Indian Telly Awards 7 times
• Star News Brand Excellence Awards for Digital Products and Internet Services
* FY12 Q2 Numbers are unaudited consolidated numbers
Note: C&S – Cable & Satellite
Cable TV | Broadband
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Investment in new technologies
Wide HE’s spread to provide quality service all
round India 71 Analog and 20 Digital Head-Ends in all
15,000 kms of HFC
1.4 million broadband enabled Homes
HD services to enhance customer viewing
New Ericsson Head-end / Compression
Ericsson Technology to help increase
channel network capacity
1 st National MSO to launch HD services
Cable TV | Broadband
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Our Existing Infrastructure allows ease of expansion
● Presence in 140 key towns and cities, including
the top markets for advertisers and broadcasters
­ Partnerships with global vendors – Cisco,Ericsson,
NDS, CommScope, Humax, Incognito, Skyworth
­ Cable network largely digital ready – only capex on
seeding STB
Market leading presence in cable distribution in
key geographies
Growing broadband network over existing cable
infrastructure
● Two way enabled network capabilities provides a
path to extend reach of broadband services
­ c.1.4 million cable homes already broadband
enabled
­ Cable plant has adequate spectrum for broadband
growth requirement
­ Minimal incremental capex for upgrading to 2-way
* FY12 Q2 Numbers are unaudited consolidated numbers
Cable TV | Broadband
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Supported by superior back end systems & Services
Technology Partners
STB vendor
Humax
STB vendor
Conditional Access Vendor
Head-end / Compression
Head-end / Compression
Server
Back end & Hardware Support
ERP
Call Centre
Skyworth
NDS
Ericsson
Scientific Atlanta
Sun Server
CISCO
Oracle
Intelenet
SMS Magna Quest Magna Quest
Cable TV | Broadband
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Hathway has been at the leading edge of cable industry in India
1998- 2002 2004-2008 2009-2011
• 1998 : The Promoters acquired
100% stake.
•2000 :
•News Corp acquired a
26% equity interest
• Started Providing
Broadband services on
DOCSIS Technology
•2002 : Acquired 200,000 direct
cable television subscribers
during the two years
•2004 : Launched digital cable service
& Reached 100,000 broadband
subscribers
• 2007 : Chrys Capital acquired a 15%
equity interest in Company
• 2008 :
• Kaup Capital, MSPI & Arcadia
Invested in Compulsorily Convertible
debentures
•Acquired 51% equity interest in
Hathway Bhaskar Multinet Pvt. Ltd In
Madhya Pradesh
•Acquired 50% equity interest in a large
independent MSO in Gujarat
• Acquired two major MSOs in
Maharashtra
• 2009 :
•First MSO to launch DVR Service In India
• Morgan Stanley, Kaup Capital & Arcadia
invest Rs. 2.4bn in FCCDs to be converted to
equity at a later date
•Reached ~ 320,000 broadband subscribers
• Reached one million digital cable
television subscribers
• 2010 : The Company raised Rs. 4.8 bn
through IPO in Feb 2010
•2011 : 1 st National MSO to launch HD services
Cable TV | Broadband
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Value added service upside
Objective to increase ARPU by 45% end of phase II
HD
Started HD Services in Mumbai,
Pune, Delhi, Hyderabad, &
Bangalore
Specialty
Channels
(Like. Food, Travelling,
Fashion, Educational
etc.)
Tiering
Hathway’s
Upside
Triggers
Broadband
Bundling with Cable TV
with Average ARPU of
Rs.500 per Month
VAS
Bundled
Services
offered to
Hathway
Subscribers
Rs.50 Additional ARPU through VAS services
VOD Negotiating with Films Libraries
Cable TV | Broadband 18

Hathway‘s HD Offers
Cable TV | Broadband
19

Hathway‘s Broadband Offers
Cable TV | Broadband
20

Clear Strategy to maintain leadership
Subs (‗000)
Subs (‗000)
Subs (‘000)
Expand Width :
Enlarge the home reached base
through expansion of foot print
8,000
6,000
4,000
2,000
-
8,655
1.8 X
4,728
FY07
FY12 Q2
Homes reached (Cable)
1,835
Increase depth :
Acquire last mile to enlarge
paying subs
1,500
1,000
500
770
2.4X
Digitizing & cross-selling:
Digitize the universe & cross-sell
broadband services
-
FY07
1,250
1,000
750
281
500
250
-
FY07
Total digital Subs
* FY12 Q2 Numbers are unaudited consolidated numbers
FY12 Q2
Total paying subs
5.5X
124
1,703
FY12 Q2
Broadband Subs
392
Cable TV | Broadband
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Robust track record of consolidation
● Track record of growth through consolidation
­ Since inception successfully identified, acquired and integrated several MSOs and LCOs
Target identification
Robust acquisition framework
Partnership vs. Acquisition
● Growth, asset quality, distribution
network and operational efficiency
● Incremental reach to garner higher
placement revenue
● Retain management - leverage on the
ground intelligence
● Management retains minority interest –
helps align long-term interests
Upgrade network
● Upgrade "last mile" to improve analog
product quality
● Offer digital services
● Two-way enable network to introduce
broadband services
Enhance service quality
● Train LCOs - improve familiarity with
services and procedures
● Ensure uniformity in service quality and
enhance the Hathway brand
Cable TV | Broadband
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Subs ('000)
Leading the digitization of cable in India – C.1.7 million Digital homes
Customer advantages
6.1x growth in digitizing the network
● Superior customer experience
● Customised local content
● Expanded channel offering
1,800
1,600
1,703
240
● VAS (EPG, PVR, NVOD, PPV)
1,400
Hathway advantages
1,200
1,000
800
600
CAGR : 57%
6.1x
1,463
Mandatory Digital
Voluntary Digital
● Enhanced customer stickiness
400
281
● ARPU enhancement
200
189
● Eliminates revenue leakage / underreporting
-
92
FY07
FY12 Q2
Hathway is the largest distributor of digital cable services
* FY12 Q2 Numbers are unaudited consolidated numbers
Cable TV | Broadband
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Subs (‘000)
Dominating market presence in cable broadband
Competitive advantages
4.1x growth in broadband subscribers
● Minimal incremental Capex which is
further declining
● Better ARPU and EBITDA margins
● Enhance customer relationship
Multi-pronged growth strategy
● Cross-sell to cable universe through
new homes passes
● Expand geographic footprint
● Attractive and cost-effective offering
Maintained c.27% penetration while growing homes passed significantly
* FY12 Q2 Numbers are unaudited consolidated numbers
Cable TV | Broadband
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Performance Indicators – Operating Metrics
Subs (000s)
2.5x Growth in RGUs
2,500
2,227
2,000
1,835
1,500
1,000
770
894
500
124
392
-
Paying CATV Subscribers Broadband Subscribers Total RGU
FY2007 770 124 894
FY12 Q2 1,835 392 2,227
Leading Operator in
Several Key Market
#1 Cable Broadband
Cable Home Reached 8.7 Million
Broadband Homepass 1.4 Million
* FY12 Q2 Numbers are unaudited consolidated numbers
Cable TV | Broadband
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` Mn
Financial Performance
` Mn
8,000
6,000
Income
5,357
5,775
7,242
• Strong growth momentum across Cable & Broadband
• 2.9x growth in revenues over FY07-11
4,000
2,000
3,222
2,288
552 733
1,055 1,254 1,263
246 391 320 367 315
2000
1800
25%
-
FY07 FY08 FY09 FY10 FY11
Cable Broadband Other Operating Income
1600
1400
EBITDA
EBITDA Margin
18%
20%
20%
• EBITDA growth from FY09 as
Strategy bearing fruit
• Key operational expenses
declining with economies of Scale
CAGR (FY07-11)
Cable 33%
Broadband 23%
Overall 31%
1200
1000
800
600
400
200
0
15%
7%
1,037
1,327 1778
5%
222 213
FY07 FY08 FY09 FY10 FY11
15%
10%
5%
0%
Cable TV | Broadband
26

Consolidated Latest results
Rs. In Million
Key Operating & Financial Metrics Units FY09 FY10 FY11
Operating Metrics
Paying Cable T V Subscribers (000s) 1,624 1,640 1,815
Paying Broadband Subscribers (000s) 341 332 375
Total Revenue Generating Unit - RGU (000s) 1,965 1,972 2,190
T otal Digital Subscribers (000s) 1,008 1,033 1,466
Financial Metrics
Cable T V Rs. In Million 5,357 5,775 7,242
Broadband Rs. In Million 1,055 1,254 1,263
Other Operating Revenue Rs. In Million 222 299 315
Operating Revenue Rs. In Million 6,634 7,328 8,821
Operating EBIT DA Rs. In Million 956 1,259 1,538
Operating EBITDA Margin % 14% 17% 17%
Non Operating Revenue Rs. In Million 98 68 241
EBIT DA (Incl. Non Optg Rev) Rs. In Million 1,054 1,327 1,778
EBITDA Margin % 16% 18% 20%
Cable TV | Broadband
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Standalone Latest results
Rs. In Million
Hathway Cable & Datacom Limited FY12 Q2 FY12 Q1 H1 FY12 H1 FY11
Income
Income from Operations 1,275.0 1,205.6 2,480.6 2,246.2
Other Operating Income 10.2 19.5 29.8 52.6
Total 1,285.2 1,225.2 2,510.4 2,298.8
Expenditure
Employees cost 104.1 104.4 208.5 199.1
Pay Channel Cost 345.6 347.5 693.0 559.5
Operational expenditure 325.9 262.1 588.0 479.4
Administrative expenditure 291.4 319.7 611.1 563.7
Total Expenditure 1,066.9 1,033.6 2,100.6 1,801.7
EBITDA before Other Income 218.3 191.5 409.8 497.2
EBITDA before Other Income Margin % 17% 16% 16% 22%
Other Income 22.6 52.2 74.8 93.6
EBITDA After Other Income 240.8 243.8 484.6 590.8
EBITDA After Other Income Margin% 19% 20% 19% 26%
Depreciation / Amortisation / Impairment 252.1 265.0 517.1 466.4
Interest 87.1 96.0 183.1 192.7
Exceptional Items (1.3) 30.7 29.4 28.6
Prior Period Adjustment 6.2 0.1 6.2 2.0
PAT (103.2) (148.0) (251.2) (98.9)
Cable TV | Broadband
28

Experienced Board
Bharat Shah – Chairman & Independent Director
Rajan Raheja – Director
Akshay Raheja – Promoter & Director
Viren Raheja – Promoter & Director
K Jayaraman – Managing Director & CEO
Uday Shankar – Director {Nominee of News Corp. (Star)}
Vinayak Aggarwal – Director
Hursh Shrivastava – Director {Nominee of News Corp. (Star)}
Brahmal Vasudevan – Independent director
Sasha Mirchandani – Independent director
Sridhar Gorthi – Independent director
Devendra Shrotri – Independent director
Cable TV | Broadband
29

Experienced management team
K. Jayaraman - CEO & MD : Jayaraman has over twelve years of experience in the Cable TV industry. He has been with Rajan Raheja Group since 1993 i.e; for the last 18 years. For
the first three years he was actively involved as board member following which, in March 1998, he took over as the CEO of Hathway. He has held various positions including that of
Head of Finance in Johnson Tiles. Prior to joining the Group he was with ICICI and Citicorp. He is a Chartered Accountant by profession.
G. Subramanian – CFO : GS has over 29 years experience as a senior finance professional in the Telecoms, Media & Infrastructure sectors. He has in his career worked with L&T,
The RPG Group, BPL Mobile Communications, Star TV & The Times Group.
Milind Karnik - President – Operations & Company Secretary : Milind joined Hathway in 1998. He started his career with audit firms R.S.M & Co and A. F. Ferguson as a Senior
Auditor. He has also worked in Hoechst India, Citigroup, Birla Marlin Securities and Caspian Broking, and has deep experience across finance and legal areas. Milind is a Chartered
Accountant, Company Secretary and a Cost Accountant . He holds a Bachelors Degree in General Law
D. Mahadevan - EVP- Finance : He has 22 years of experience in accounting and finance, and has worked extensively in arranging for funds from both national & nternational banks
& financial institutions. He has worked with Orkay Industries Limited, H & R Johnson India Limited and Shaw Wallace Limited before joining our Company. Mr. Mahadevan is a
Chartered Accountant and holds a Bachelors Degree in Commerce from Mumbai University. He also underwent the Senior Management programme for management development
conducted by the Indian Institute of Management, Ahmedabad in the year 2000.
Roshan D'souza - President – Broadband : Roshan has 16 years of cross functional experience in the technology space. He is a Electronics Engineer and holds a Masters degree in
Management. Having worked for both Indian and MNC, his last assignment was with Cisco Systems India (P) Ltd. where he held the position of VP-Service Provider Business.
Rajesh Brid - VP – IT, Systems & NOC: Rajesh joined Hathway in 2002. He has worked with various leading MNCs in India like Boehringer Mannhiem, Mirc Electronics (Onida), E.I.
DuPont and General Motors in their IT department. He holds a Bachelors degree in Engineering (Computers) and a Diploma in Financial Management
Rajeev Pareek - EVP- Marketing : Rajeev joined Hathway in 1999 and has over 19 years of experience in the Media Industry. Prior to joining Hathway, he was with IndusInd Media &
Communications in their marketing division. He has successfully handled projects, credit control, collections and product management functions; involved in successful launch of the
maiden print product of Hathway. Rajeev holds a Masters Degree in Management Studies and a Bachelors Degree in Science
Glenn Pinto - VP – HR & Administration : Glenn joined Hathway in 2001 and has worked with various leading companies like Burroughs Wellcome India (now known as Glaxo
Wellcome), Eicher Goodearth, Elf Lubricants, Eureka Forbes, Golden Tobacco & Godrej Soaps. He holds a Masters Degree in Personnel Management from the Symbiosis Institute of
Business Management, Pune. Glenn also holds a Diploma in Personnel Management from Xavier Institute of Management, Mumbai
Bhavik Palan - EVP – Legal & Regulatory : Bhavik has been a legal consultant to Reliance Industries Limited for the last ten years and has joined Hathway in 2008. A solicitor by
profession, he commenced his career with M/s Kanga & Co, Advocates and Solicitors and has practiced as a solicitor with Atul .S. Dayal & Associates. His key areas of practice are
civil litigation and conveyancing. He is responsible for all litigation for and against the company including Regulatory and Civil Litigation and Arbitration as well as guiding all the Legal
documentation of and for the company.
Cable TV | Broadband
30

Shareholding pattern as of Q2FY12
16%
13%
5%
67%
Promoter FII DII Others
Promoters:
Raheja group 49.53%
News corp. 17.30%
Cable TV | Broadband
31

3
2
Hathway Cable & Datacom Limited
Registered Office at ‘Rahejas’, 4th Floor,
Corner of Main Avenue & V.P.Road,
Santacruz West, Mumbai 400054
www.hathway.com
Thank you