Dish TV investor Presentation
Dish TV investor Presentation
Dish TV investor Presentation
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<strong>Dish</strong> <strong>TV</strong> India Limited<br />
Investor <strong>Presentation</strong>
Disclaimer<br />
Some of the statements made in this presentation are forward-looking statements and are<br />
based on the current beliefs, assumptions, expectations, estimates, objectives and<br />
projections of the directors and management of <strong>Dish</strong> <strong>TV</strong> India Limited about its business<br />
and the industry and markets in which it operates.<br />
These forward-looking statements include, without limitation, statements relating to<br />
revenues and earnings. The words<br />
“believe”, “anticipate”, “expect”, “estimate”,“intend”, “project” and similar expressions<br />
are also intended to identify forward looking statements.<br />
These statements are not guarantees of future performance and are subject to<br />
risks, uncertainties and other factors, some of which are beyond the control of the<br />
Company and are difficult to predict. Consequently, actual results could differ materially<br />
from those expressed or forecast in the forward-looking statements as a result of, among<br />
other factors, changes in economic and market conditions, changes in the regulatory<br />
environment and other business and operational risks. <strong>Dish</strong> <strong>TV</strong> India Limited does not<br />
undertake to update these forward-looking statements to reflect events or circumstances<br />
that may arise after publication.<br />
2
About us<br />
• India’s pioneer DTH service provider; the only listed pure-play DTH company in<br />
the country.<br />
• Consistent market leader with 32% subscriber share currently.<br />
• Part of the:<br />
GROUP<br />
Having diverse presence across media, packaging, entertainment, technology<br />
enabled services, infrastructure development and education.<br />
India’s first and the country’s largest fully integrated media and entertainment<br />
conglomerate.<br />
• Promoted and led by Subhash Chandra, Chairman, Essel group of companies, a<br />
thought leader and a pioneer in most of his businesses.<br />
3
Indian DTH industry<br />
4
SUBSCRIBERS IN MN<br />
Journey so far<br />
25<br />
VOLUNTARY DIGILIZATION<br />
BY CABLE OPERATORS .<br />
DTH SUBS CROSS<br />
20 MN MARK<br />
20<br />
DTH SUBS BREACH THE 2MN<br />
MARK IN A 2 PLAYER MKT.<br />
15<br />
10<br />
5<br />
LAUNCH OF DTH SERVICE<br />
BY DISH <strong>TV</strong> IN SELECT<br />
MARKETS<br />
DISPUTE OVER CONTENT .<br />
SETTLEMENT BTW DISH & STAR<br />
DIGITIZATION<br />
TRIGGRED,<br />
CAS MADE<br />
MANDATORY IN<br />
SELECT<br />
PART OF METROS<br />
LAUNCH BY<br />
SUN DIRECT<br />
LAUNCH OF<br />
DTH SERVICE<br />
BY TATASKY<br />
DISPUTE WITH SUN <strong>TV</strong><br />
OVER CONTENT. SETTLED.<br />
DTH SUBSCRIBER<br />
BASE AT ~10 MN<br />
LAUNCH OF<br />
RELIANCE BIG <strong>TV</strong><br />
LAUNCH OF DTH<br />
SERVICE BY VIDEOCON<br />
LAUNCH OF DTH<br />
SERVICE BY AIRTEL<br />
0<br />
DISH Subscribers<br />
DTH Subscribers<br />
5
Million<br />
Opportunities galore!<br />
Key statistics:<br />
Total HHs<br />
232 mn.<br />
<strong>TV</strong> HHs<br />
136 mn.<br />
<strong>TV</strong> Penetration 59%<br />
C&S HHs<br />
105 mn.<br />
C&S Penetration (in <strong>TV</strong> HHs) 77%<br />
DTH Subs *<br />
27.5 mn.<br />
300<br />
250<br />
200<br />
150<br />
100<br />
50<br />
0<br />
73%<br />
77%<br />
81% 84% 86%<br />
88%<br />
238 241 243<br />
236<br />
229 233<br />
129 136 142 147 152 155<br />
130 136<br />
115 123<br />
94 105<br />
2008 2009 2010E 2011E 2012E 2013E<br />
Total HHs<br />
<strong>TV</strong> HHs<br />
C&S HHs<br />
C&S Penetration<br />
100%<br />
80%<br />
60%<br />
40%<br />
20%<br />
0%<br />
• Increasing <strong>TV</strong> HHs; likely to be 155 million, 64% penetration, by 2013.<br />
Developed countries average penetration at more than 97%. China at 98%.<br />
• C&S penetration: huge opportunity, likely to be 88% by 2013.<br />
• DTH to be the key driver & direct beneficiary of increasing C&S households!<br />
Source: MPA 2009 report * Up to 31/10/10. (Source: market est.) C&S implies cable <strong>TV</strong> & DTH HHs<br />
6
DTH growth projections…<br />
40<br />
35<br />
30<br />
25<br />
20<br />
15<br />
10<br />
5<br />
0<br />
MPA 2009 FICCI Frames 2010<br />
37.8<br />
45<br />
34.1<br />
20.5% CAGR 2009-13 40 25% CAGR 2009-13<br />
29.5<br />
35<br />
30<br />
24.1<br />
30<br />
24<br />
17.9<br />
25<br />
11.1<br />
20 16<br />
15<br />
1.1<br />
3.6<br />
10<br />
5<br />
43<br />
39<br />
35<br />
0<br />
2006 2007 2008 2009 2010p 2011p 2012p 2013p<br />
2009 2010p 2011p 2012p 2013p 2014p<br />
DTH Sub. Base (mn.)<br />
70%<br />
60%<br />
50%<br />
40%<br />
30%<br />
20%<br />
10%<br />
0%<br />
58.5% 61.2%<br />
63.9% 64.3% 63.9% 63.7% 63.5% 63.3% 63.2%<br />
12.0%<br />
1.0% 2.0% 4.0% 8.6% 13.1%<br />
0.4% 0.9%<br />
2.9%<br />
17.0% 21.0% 24.0%<br />
16.9% 20.0%<br />
26.0%<br />
28.0%<br />
22.4% 24.4%<br />
% Cable HHs to <strong>TV</strong> HHs % DTH HHs to <strong>TV</strong> HHs % DTH HHs to Pay <strong>TV</strong> HHs<br />
Source: MPA 2009<br />
Cable HHs include analogue & digital cable<br />
Pay <strong>TV</strong> includes Cable + DTH + IP<strong>TV</strong><br />
7
Outperformed !!<br />
MPA 2009 Report - Indian DTH subscribers to reach 24.1 mn. by the<br />
end of 2010 !<br />
FICCI Frames 2010 -“Total number of DTH subscribers to be added in<br />
2010 is expected to be ~ 8 million.”<br />
January – October 2010 – 9.0 million* DTH subscribers added<br />
taking industry size to 27.5 million!<br />
Festival quarter continues to surprise positively!<br />
* Source: <strong>Dish</strong> <strong>TV</strong> actual & Market Est.<br />
8
Outperformed !!<br />
30<br />
25<br />
20<br />
15<br />
10<br />
5<br />
0<br />
DTH industry scale-up<br />
Subscribers in Mn.<br />
1.5<br />
4.3<br />
10.3<br />
18.4<br />
27.5<br />
2006 2007 2008 2009 2010 - Upto<br />
October<br />
Source: <strong>Dish</strong><br />
<strong>TV</strong> actual &<br />
industry est.<br />
• DTH driving digitization & growth in pay-<strong>TV</strong> HHs.<br />
• DTH penetration already at ~ 26% of C&S HHs; ahead of estimates.<br />
• An estimated 60% of all new C&S subscribers up to 2018 expected to opt for a DTH connection.*<br />
• TRAI’s recent recommendations on digitization in the form of sunset clause to provide further impetus.<br />
With more than 2.5 mn. subscribers being added every quarter, India is poised to overtake<br />
the current leader (U.S), which currently adds ~ 1.5 mn. subscribers each year.<br />
9<br />
* Source: MPA report 2009
Digitizing with addressability<br />
100%<br />
90%<br />
80%<br />
70%<br />
60%<br />
50%<br />
40%<br />
30%<br />
20%<br />
10%<br />
0%<br />
92%<br />
Cable subscription to broadcasers<br />
DTH subscription to broadcasters<br />
83%<br />
67%<br />
56% 53%<br />
51%<br />
44% 47% 49%<br />
33%<br />
17%<br />
8%<br />
2006 2007 2008 2009 2010 P 2011 P<br />
` mn.<br />
Subscription Revenue<br />
Cable Subscription to Broadcasters 2006 2007 2008 2009 2010P 2011P<br />
Subscription Income Paid (Digital + Analogue) 19750 23110 27545 30805 34535 39305<br />
Less: Carriage & Placement Received 5000 6000 12000 13000 13000 13300<br />
Net Subscription Paid 14750 17110 15545 17805 21535 26005<br />
DTH Subscription to Broadcasters<br />
Net Subscription Paid 1360 3415 7795 13905 19375 24925<br />
DTH continues to strengthen its relationship with broadcasters creating a win-win<br />
situation for both.<br />
Source: MPA 2009, FICCI 2010 &<br />
Mkt. estimates<br />
10
Key regulations<br />
Licensing<br />
• Total foreign investment limit of 49% (sub limit ceiling of 20% for FDI) *<br />
• Uplink centre to be in India<br />
• Set-top boxes to be BIS compliant<br />
• License fee at 10% of DTH revenues (favourable TDSAT Order received on 28/05/10 will result in<br />
license fee outflow at ~ 4%)<br />
• Initial license validity of 10 years; renewable thereafter<br />
Service<br />
quality<br />
• Subscribers can be offered STBs on Rent/Hire-Purchase/Sale<br />
• Mechanism to be in place for handling customer complaints & grievances<br />
Interconnect<br />
• Broadcasters have to provide content to all distribution platforms; pricing flexible<br />
• Prohibits broadcasters from seeking guarantee for minimum number of subscribers<br />
Reference<br />
interconnect<br />
• Pricing information on content of the broadcaster<br />
• Maximum 50% of non-CAS cable rates<br />
• A-la-carte offering to be allowed<br />
* As per TRAI‟s (Telecom Regulatory Authority of India) recommendation dated 30 th June, 2010 to the Ministry of I&B, Foreign Investment<br />
Limit for DTH is to be increased to 74%. The recommendation is yet to be approved.<br />
11
Recent regulatory initiatives<br />
Tariff Order<br />
for<br />
addressable<br />
systems<br />
• Broadcasters to mandatorily provide pay channels to digital service providers at a maximum of 35%<br />
of corresponding rates for non-addressable cable <strong>TV</strong> services *<br />
• Retail tariff under forbearance.<br />
Digitization<br />
TRAI recommendation on sunset date for analogue <strong>TV</strong> systems in India:<br />
• Phase I # - Four metros – by 31/03/2011. Phase II – Cities with 1 mn.+ population - by 31/12/2011<br />
• Phase III – Other urban areas – by 31/12/2012. Phase IV – Rest of India – by 31/12/2013.<br />
* Since challenged by Pay Broadcasters in TDSAT.<br />
# Phase I likely to miss deadline due to Common Wealth Games and state elections.<br />
12
<strong>Dish</strong> <strong>TV</strong> – market leader in DTH<br />
13
Business – basics<br />
• Direct-to-home distribution of <strong>TV</strong> channels up-linked from India by<br />
Broadcasters.<br />
• CPE installed on rent at consumer’s premises.<br />
• Inertia to pay for hardware equipment results in up-front subsidy on STBs.<br />
• Negative Working Capital cycle – subscription revenue collected in advance.<br />
• DTH revenue includes subscription and lease rentals.<br />
• Emerging revenue streams - Value-added-services, Movie –on-demand and<br />
Bandwidth charges.<br />
• Fixed content cost deals with most broadcasters; significant competitive<br />
advantage.<br />
• Growing subscriber base would bring operating leverage into play.<br />
14
Key strengths<br />
Brand<br />
Strong Brand presence and Brand recall.<br />
Market Leadership<br />
Largest subscriber base amongst all six players; currently at 32%.<br />
Carried and distributed by most third party dealers and distributors.<br />
Content<br />
Highest number; more than 250 channels & services and growing.<br />
Fixed content cost deal with most big broadcasters.<br />
Selling & Distribution Network<br />
Pan-India presence through 1400 distributors & ~55,000 dealers across 6600 towns<br />
Network managed by over 200 sales personnel. 8 Zonal and 19 Regional Offices.<br />
Advanced Infrastructure & Technology<br />
Sufficient capacity to broadcast increasing number of channels – currently 11 KU<br />
band transponders equivalent.<br />
‘DISH TRUHD’ with content tie-up with highest no. of HD channel broadcasters.<br />
15
Select key management personnel<br />
Subhash Chandra<br />
Non Executive Chairman<br />
Jawahar Lal Goel<br />
Managing Director<br />
R.C. Venkateish<br />
CEO<br />
Salil Kapoor<br />
COO<br />
Rajeev Dalmia<br />
CFO<br />
Promoter – Essel Group of Companies. He is the<br />
pioneer of the Indian television industry and recipient<br />
of numerous honorary degrees, industry awards and<br />
civic honours. Profile - Chairman.pdf<br />
Mr. Goel is the MD of <strong>Dish</strong> <strong>TV</strong> since January ‘07 & has<br />
been instrumental in establishing it as India’s leading<br />
DTH company. He has also been actively involved in<br />
the expansion of the Essel Group and is an active<br />
member on the Board of various committees set up by<br />
MIB, Govt. of India for addressing critical matters<br />
relating to the industry. Profile - MD.pdf<br />
On-board since July ‘10, he was the MD-India & South<br />
Asia, ESPN Star Sports before that. An IIT, IIM<br />
Graduate, Venkateish has more than 27 years of<br />
experience & a successful track record in turning<br />
around businesses & re- defining business processes<br />
for winning brands like Oral-B, Nestle and Kelloggs.<br />
Profile - CEO.pdf<br />
Salil has a work experience of more than 18 years and<br />
has worked with various global corporations including<br />
Microsoft and Samsung. He is an MBA from Delhi<br />
University.<br />
A qualified Chartered Accountant, Rajeev has been<br />
leading the finance department since January, ‘07.<br />
16
<strong>Dish</strong> <strong>TV</strong> – now<br />
17
18<br />
<strong>Dish</strong> <strong>TV</strong> crossed the 9 million subscriber mark in November, ‘10 becoming the first DTH player in<br />
the country to achieve the landmark number so far.
Market leading share<br />
<strong>Dish</strong> <strong>TV</strong> continues to lead with the highest market share amongst all 6<br />
players<br />
18% 10%<br />
20%<br />
15%<br />
5%<br />
32%<br />
<strong>Dish</strong> <strong>TV</strong> Tata Sky Sun Direct<br />
Big <strong>TV</strong> Airtel Digital Videocon D2h<br />
Source: <strong>Dish</strong> <strong>TV</strong> actual & industry est.<br />
(31/10/10)<br />
19
Consistent leadership<br />
<strong>Dish</strong> <strong>TV</strong> – Increasing number of subscribers<br />
<strong>Dish</strong> <strong>TV</strong> - Market share on total subscriber base<br />
10<br />
8<br />
6<br />
4<br />
2<br />
3.9<br />
3.4<br />
4.7<br />
5.9<br />
5.5<br />
5.1<br />
5<br />
4.6<br />
4.3<br />
4<br />
6.9<br />
6.4<br />
5.7<br />
5.3<br />
8.7<br />
8.3<br />
7.5<br />
7.1<br />
6.8<br />
6.2<br />
30<br />
25<br />
20<br />
15<br />
10<br />
5<br />
75%<br />
23<br />
20.7<br />
18.4<br />
42%<br />
11.1<br />
35% 33%<br />
6.4<br />
6.9<br />
3.6<br />
4.7<br />
2.7<br />
27.5<br />
26<br />
33% 32% 32%<br />
7.5 8.3 8.7<br />
80%<br />
70%<br />
60%<br />
50%<br />
40%<br />
30%<br />
20%<br />
10%<br />
0<br />
0<br />
0%<br />
Dec. '07 Dec. '08 Dec. '09 Mar. '10 June '10<br />
Sept.<br />
'10<br />
Oct. '10<br />
Total DTH Subscribers<br />
<strong>Dish</strong> <strong>TV</strong> Subscribers<br />
Gross Subscriber Base (mn.)<br />
Net Subscriber Base (mn.)<br />
<strong>Dish</strong> <strong>TV</strong> Market Share<br />
Source: <strong>Dish</strong> <strong>TV</strong><br />
Players with large and stable subscriber base to emerge as winners in the long run.<br />
<strong>Dish</strong> <strong>TV</strong> is well placed being the largest player in the DTH industry.<br />
20
`<br />
`<br />
Q1 FY 09<br />
Q1 FY 09<br />
Q2 FY 09<br />
Q2 FY 09<br />
Q3 FY 09<br />
Q3 FY 09<br />
Q4 FY 09<br />
Q4 FY 09<br />
Q1 FY 10<br />
Q1 FY 10<br />
Q2 FY 10<br />
Q2 FY 10<br />
Q3 FY 10<br />
2487 2635 2477 2383 2147 2083<br />
Q3 FY 10<br />
Q4 FY 10<br />
Q4 FY 10<br />
Q1 FY 11<br />
Q1 FY 11<br />
Q2 FY 11<br />
Q2 FY 11<br />
Key business metrics<br />
240<br />
Average Revenue Per User (ARPU)<br />
160<br />
164<br />
150 137 132<br />
142<br />
139 135 138 139 139<br />
80<br />
0<br />
• Increasing trend – rationalisation back!<br />
• Continuous efforts to evolve ARPU levels.<br />
Subscriber Acquisition Cost (SAC)<br />
3000<br />
2634 2601 2832 2505<br />
2000<br />
1000<br />
0<br />
• Focus on reducing subsidies.<br />
• Support coming in from growing<br />
incremental market share.<br />
Source: Company ARPU = (Subscription revenue + activation charges) / Avg. subscribers during the period; SAC = Subsidy on STB+80% of<br />
marketing expenses + Commission to dealers<br />
21
Driving up ARPUs – marketing initiatives<br />
Silver pack made dormant.<br />
Constant marketing initiatives to create better value proposition in higher ARPU packs.<br />
22
Driving up ARPUs – HD & VAS<br />
High Definition & Value Added Services seen as ARPU drivers in the long run.<br />
23
Financials<br />
24
` Mn<br />
` Mn.<br />
` Mn<br />
Q2 FY 09<br />
-874<br />
Q3 FY 09<br />
-389<br />
Q4 FY 09<br />
42<br />
Q1 FY 10<br />
157<br />
Q2 FY 10<br />
255<br />
134<br />
Q3 FY 10<br />
Q4 FY 10<br />
400<br />
Q1 FY 11<br />
322<br />
Q2 FY 11<br />
498<br />
Encouraging performance<br />
Operating Revenues - Annual<br />
EBITDA Margins - Annual<br />
12000<br />
10000<br />
8000<br />
6000<br />
4000<br />
2000<br />
FY 08-10 CAGR 62.0%<br />
4127<br />
1909<br />
7377<br />
10848<br />
20%<br />
0%<br />
-20%<br />
-40%<br />
-60%<br />
8.7%<br />
FY 07 FY 08 FY 09 FY 10<br />
-18.3%<br />
0<br />
FY 07 FY 08 FY 09 FY 10<br />
-80%<br />
-100%<br />
-97%<br />
-53%<br />
Operating Revenues - Quarterly<br />
EBITDA & EBITDA Margins - Quarterly<br />
3500<br />
3000<br />
2500<br />
2000<br />
1500<br />
1000<br />
500<br />
0<br />
3261<br />
3032 3043<br />
2775<br />
2467 2575<br />
Q1 FY 10 Q2 FY10 Q3 FY10 Q4 FY10 Q1 FY 11 Q2 FY 11<br />
25<br />
600<br />
400<br />
200<br />
0<br />
-200<br />
-400<br />
-600<br />
-800<br />
-1000<br />
-50%<br />
-20%<br />
2%<br />
6.4%<br />
9.9%<br />
4.8%<br />
13.2% 10.6%<br />
15.3%<br />
20%<br />
10%<br />
0%<br />
-10%<br />
-20%<br />
-30%<br />
-40%<br />
-50%<br />
-60%
Subs mn<br />
171<br />
202<br />
234<br />
319<br />
529<br />
540<br />
588<br />
971<br />
1023<br />
1086<br />
1150<br />
1298<br />
1437<br />
1638<br />
Fixed content cost driving margins<br />
3000<br />
2500<br />
2000<br />
1500<br />
1000<br />
500<br />
0<br />
80%<br />
71% 71%<br />
73%<br />
70%<br />
70%<br />
61% 61% 59%<br />
60%<br />
58% 61% 60%<br />
54%<br />
57%<br />
54% 54%<br />
46%<br />
50%<br />
41%<br />
46% 46%<br />
40% 39% 39%<br />
43% 42% 39% 40%<br />
29%<br />
30%<br />
29% 27%<br />
30%<br />
20%<br />
10%<br />
420 502 646 755 804 867 929 670 881 925 986 1,001 1,060 1,062<br />
0%<br />
Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10<br />
Content Cost Contribution Content Cost (% Subs Revenue)<br />
26
Summary financials<br />
Quarter ended Sept '09 Dec '09 March '10 June '10 Sept '10<br />
Gross operating revenue 2575 2775 3032 3043 3261<br />
Expenditure 2344 2659 2683 2721 2763<br />
EBITDA 231 116 349 322 498<br />
Add: Other income 4 11 5 69 25<br />
Less: Depreciation 730 779 846 889 843<br />
EBIT -495 -652 -492 -498 -320<br />
Less: Financial expenses 66 110 106 133 131<br />
PBT -561 -762 -598 -631 -451<br />
Provision for tax 0 0 0 0 0<br />
PAT -561 -762 -598 -631 -451<br />
Operating Metrics Sept '09 Dec '09 March '10 June '10 Sept '10<br />
Subscribers added (mn.) 0.41 0.55 0.44 0.64 0.76<br />
SAC (Rs/subscriber) 2635 2477 2383 2147 2083<br />
ARPU (INR) 139 135 138 139 139<br />
** Flat QoQ revenue growth in June „10 due to discontinuation of HITS operations.<br />
Source: Company Financials. All figures in ` mn. except mentioned otherwise.<br />
27
Way forward<br />
28
Growth beyond just subscriber numbers<br />
Continuous<br />
focus on:<br />
Sustained<br />
product<br />
Customer care<br />
Expand<br />
customer<br />
base with<br />
Augmenting<br />
revenue<br />
contribution<br />
through<br />
innovative value<br />
added services<br />
innovation to<br />
retain<br />
subscribers and<br />
expand<br />
category<br />
Brand building<br />
Technology<br />
and<br />
Distribution<br />
focus on<br />
leadership<br />
29
Thank you<br />
30
Questions<br />
31