Concall Transcript - Dish TV
Concall Transcript - Dish TV
Concall Transcript - Dish TV
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DISH <strong>TV</strong> INDIA LIMITED<br />
4Q FY2010 TELECONFERENCE<br />
MAY 10, 2010, 4.30 P.M. INDIA TIME<br />
Moderator:<br />
Ladies and gentlemen good afternoon, this is Melissa, the Chorus<br />
Call Conference operator. Welcome to the <strong>Dish</strong> <strong>TV</strong> India Limited<br />
fourth quarter FY10 results conference call. As a reminder, all<br />
participant lines will be in the listen-only mode and there will be<br />
an opportunity for you to ask questions at the end of today’s<br />
presentation. Should you need assistance during the conference<br />
call, please signal an operator by pressing * and then 0 on your<br />
touch-tone phone. Please note that this conference is being<br />
recorded. I would now like to hand the conference over to Mr.<br />
Tarun Nanda of <strong>Dish</strong> <strong>TV</strong> India Limited. Thank you and over to sir.<br />
Tarun:<br />
Thank you Melissa. Good evening ladies and gentlemen and thank<br />
you for joining us today. This conference call has been organized<br />
to update our investors on the performance of <strong>Dish</strong> <strong>TV</strong> India<br />
Limited in the fourth quarter of fiscal 2010 that is, the quarter<br />
ended March 31 st. and also to share with you the outlook of the<br />
management of the company.<br />
Joining us today is the senior management team of <strong>Dish</strong> <strong>TV</strong><br />
including Mr. Jawahar Goel – Managing Director, Mr. Rajeev<br />
Dalmia – CFO and Mr. Salil Kapoor - COO. We will start with a<br />
brief statement from Mr. Goel and will then open the discussion<br />
for question and answer.<br />
I would like to remind everybody that anything that we say during<br />
this call that refers to our outlook for the future is a forward-
DISH <strong>TV</strong> INDIA LTD 4Q FY2010 TELECONFERENCE MAY 10, 2010<br />
looking statement that must be taken in the context of the risks that<br />
we face. I would also like to request all media organizations to<br />
please refrain from participating in this concall, since it has been<br />
organized purely for our investors and fund-houses and analysts<br />
tracking the company.<br />
With this I would now request Mr. Jawahar Goel to address the<br />
participants.<br />
Jawahar:<br />
Thank you Tarun. Good evening ladies and gentlemen and thank<br />
you for joining us today to discuss the results of <strong>Dish</strong> <strong>TV</strong> India<br />
Limited for the quarter ended March 31, 2010.<br />
Digitization in India continues to grow at a rapid pace with over 8<br />
million new subscribers adopting DTH in financial year 2010.<br />
Proliferation of television channels, viewers increasing sensitivity<br />
to quality transmission & programming of their choice and a<br />
growing demand for value-added services, has further promoted<br />
the DTH revolution in the country. The DTH category, pioneered<br />
by <strong>Dish</strong> <strong>TV</strong> in India, has caught the fancy of television viewers<br />
and I am happy to report that the company, with its game changing<br />
innovations for subscriber acquisition, focus on brand building and<br />
customer satisfaction, has maintained its leadership position with<br />
over 33% share in the pay DTH market.<br />
<strong>Dish</strong> <strong>TV</strong> ventured into unexplored territories to further build on its<br />
leadership and amongst various other groundbreaking initiatives,<br />
introduced live television entertainment on select trains in India<br />
thus taking the Indian DTH industry to the next level of<br />
entertainment. Further, tapping onto the low internet penetration<br />
Page 2 of 24
DISH <strong>TV</strong> INDIA LTD 4Q FY2010 TELECONFERENCE MAY 10, 2010<br />
levels in India and sensing upside in the terms of significant<br />
revenue potential, <strong>Dish</strong> <strong>TV</strong> tied up with ‘Yatra.com’,<br />
‘Monster.com’ and ‘Shaadi.com’ to provide internet-based services<br />
through DTH television.<br />
Let me now take you through the results for the fourth quarter and<br />
year ended March 31 st , 2010:<br />
<strong>Dish</strong> <strong>TV</strong> delivered encouraging numbers and the company crossed<br />
the ten billion rupee mark in revenues in the fiscal 2010. The<br />
operating revenues for the period stood at Rs.10.9 billion,<br />
recording an increase of 48% as compared to the corresponding<br />
period last fiscal. The operating revenues for quarter four went up<br />
46% to Rs.3 billion. EBITDA for the year ended March 31 st stood<br />
at Rs.915 million, an increase of 148% as compared to the<br />
corresponding period last fiscal. Recording significant year-onyear<br />
growth, EBITDA for quarter four stood at Rs.354 million. We<br />
closed the year with a positive EBITDA in each of the four<br />
quarters. Subscription revenue stood at Rs.8,350 million in<br />
financial year 2010 as compared to Rs.5,870 million in FY09,<br />
registering a growth of 42%.<br />
Moving over to operating performance, in the fiscal gone by <strong>Dish</strong><br />
<strong>TV</strong> successfully implemented SAP. The implementation of SAP in<br />
our company marks achievement of the first major milestone<br />
towards migrating non-standard legacy systems and users to a<br />
common SAP platform. This program will enable the company to<br />
integrate and manage its business and reporting process more<br />
efficiently.<br />
Page 3 of 24
DISH <strong>TV</strong> INDIA LTD 4Q FY2010 TELECONFERENCE MAY 10, 2010<br />
<strong>Dish</strong> <strong>TV</strong> plans to introduce high-definition service in June this<br />
year. Our HD set-up box, will enable the subscriber to receive HD<br />
feed and record content from a single set-top box. We believe the<br />
Commonwealth games will trigger the high definition revolution in<br />
India, just like the Asian games drove in the color <strong>TV</strong> revolution in<br />
1982. Going forward, the HD technology will further accelerate<br />
DTH growth in the country.<br />
An action-packed sports calendar in the current fiscal is expected<br />
to offer significant incremental revenue opportunity to the DTH<br />
operators and <strong>Dish</strong> <strong>TV</strong> is well-positioned to monetize it.<br />
I would like to conclude by saying that <strong>Dish</strong> <strong>TV</strong> is well-prepared<br />
to capitalize on the future growth in the DTH industry and that the<br />
current fiscal would be even better for us in terms of subscriber<br />
acquisition and overall performance.<br />
With this I would now like to open the floor for question and<br />
answer.<br />
Moderator:<br />
Amit:<br />
Rajeev:<br />
Thank you sir. Ladies and gentlemen we will now begin with the<br />
question and answer session. The first question is from the line of<br />
Amit Kumar from Kotak Securities, please go ahead.<br />
Thank you for the opportunity sir, great set of numbers. I just<br />
wanted to know the breakup of DTH revenues amongst<br />
subscription, rental, and bandwidth for this quarter.<br />
Subscription revenue was Rs. 230 crores, lease rental was Rs.<br />
41crores and bandwidth was close to Rs. 4.5 crores. Teleport and<br />
other services are in addition to this.<br />
Page 4 of 24
DISH <strong>TV</strong> INDIA LTD 4Q FY2010 TELECONFERENCE MAY 10, 2010<br />
Amit:<br />
Jawahar:<br />
Amit:<br />
Moderator:<br />
Abneesh:<br />
Jawahar:<br />
Abneesh:<br />
Jawahar:<br />
Abneesh:<br />
Sir, I am sorry I missed this point; do you think that the HD service<br />
will have a recording feature also<br />
That is right.<br />
Thanks, that is it from my side. I will come back.<br />
Thank you. The next question is from the line of Abneesh Roy<br />
from Edelweiss Capital, please go ahead.<br />
Sir, congratulations on a good set of numbers. If I see in Q4 there<br />
are a lot of sports events and this reflects on two things, one is<br />
subscriber addition being good and second is ad spends being low.<br />
FY11 also has a lot of sports event, so could you guide us in terms<br />
how much of ad spends we are looking at and in terms of<br />
subscriber addition for you and the industry, what is the number<br />
you are looking at<br />
Abneesh our marketing budget for the financial year 2010 was to<br />
the tune of Rs.100 crores, whereas we had spent around Rs. 80<br />
crores only. We could save money because we have barter<br />
arrangements with some of our channel providers. That was close<br />
to Rs. 30 crores.<br />
What are we giving in return You are getting ad spots.<br />
We carry them on our platform with some carriage fee and some<br />
barter. Going forward our ad spend will be in the range of Rs.100<br />
to 110 crores.<br />
Okay so will there be a jump of Rs. 30 crores YoY<br />
Page 5 of 24
DISH <strong>TV</strong> INDIA LTD 4Q FY2010 TELECONFERENCE MAY 10, 2010<br />
Jawahar:<br />
Abneesh:<br />
Jawahar:<br />
Abneesh:<br />
Jawahar:<br />
Abneesh:<br />
Jawahar:<br />
Abneesh:<br />
Jawahar:<br />
Abneesh:<br />
Well, we carry on with this kind of budget but we have been<br />
saving some amount and spending wisely.<br />
And subscriber addition for you and the industry in FY11<br />
There are 180 days of sports events and the Commonwealth games<br />
in addition, so as per our estimates, this year the category should<br />
add 10 million plus subscribers. We plan to have 25 % plus market<br />
share.<br />
Of the incremental 10 million<br />
Yes.<br />
And sir could you tell us once the sports events get over, how<br />
much is the stickiness, what percentage of the subscribers move<br />
away after say three-four months <br />
Barring a few sports channels which cover only some events, other<br />
channels like Ten Sports, Zee Sports, ESPN and Star Sports have<br />
activities all the year round and thus the subscriber stays on.<br />
And sir my last question is on your HD offering when is that link<br />
planned and vis-à-vis competitors we are actually late, so in terms<br />
of consumer awareness, consumer pull how will you differentiate<br />
As mentioned in my statement, we are going to launch in the<br />
month of June. Strategy and differentiation vis-à-vis competitors<br />
cannot be discussed in this forum.<br />
And sir lastly on the interest expense, would it go down starting<br />
Q1<br />
Page 6 of 24
DISH <strong>TV</strong> INDIA LTD 4Q FY2010 TELECONFERENCE MAY 10, 2010<br />
Rajeev:<br />
Abneesh:<br />
Jawahar:<br />
Rajeev:<br />
Abneesh:<br />
Rajeev:<br />
Abneesh:<br />
Moderator:<br />
Rohit:<br />
Rajeev:<br />
Rohit:<br />
Rajeev:<br />
Rohit:<br />
Interest cost will continue to be the same at least for the next three<br />
quarters.<br />
But you have repaid a lot of debt right<br />
No, that is not the case.<br />
Banking debt continues to be Rs. 925 to 950 crores and they have<br />
not become due. Majority of the debt will become due from next<br />
year onwards.<br />
No I was talking about the group debt, you have repaid those<br />
That was in the month of January, the effect for which is already<br />
reflected in the month of March. There is no group debt right now<br />
which has been taken by us.<br />
Okay sir thanks a lot.<br />
Thank you Mr. Roy. The next question is from the line of Rohit<br />
Dokania from B&K Securities, please go ahead.<br />
Hi sir, congratulations on a good set of numbers, just two - three<br />
questions. Is there any HITS revenue that we have booked in this<br />
quarter in the P&L<br />
It is around Rs. 20 crores.<br />
Okay and also sir, what is the total Capex for FY10 that we have<br />
done<br />
On account of boxes it is around Rs. 550 crores.<br />
And other than boxes<br />
Page 7 of 24
DISH <strong>TV</strong> INDIA LTD 4Q FY2010 TELECONFERENCE MAY 10, 2010<br />
Rajeev:<br />
Rohit:<br />
Jawahar:<br />
Rohit:<br />
Moderator:<br />
Sameer:<br />
Jawahar:<br />
Around Rs. 25 crores.<br />
Okay and sir just one final question if you could give us some<br />
views on how you see the ARPU trending in FY11 over FY10<br />
average<br />
See the ARPU on the net subscriber base was Rs. 138 and the<br />
renewal ARPU is Rs.166. Our exit for next year should be around<br />
Rs.155.<br />
Okay that is really helpful sir. Thanks a lot and all the best.<br />
Thank you. The next question is from the line of Sameer<br />
Naringrekar from PNB Paribas, please go ahead.<br />
Hi good afternoon, just one question in terms of the programming<br />
cost. If I look at your programming cost per subscriber, we had<br />
seen a drop in the programming cost in the fourth quarter last<br />
financial year from about Rs.96 to about Rs.66, just want to check<br />
if the current drop as well to roughly about Rs.72, is it a trend that<br />
is going to continue or could we probably see the programming<br />
cost again jump up through about Rs.77 Rs.78 per subscriber levels<br />
and what should we assume going ahead to be the trend for these<br />
costs<br />
Actually in the last to last financial year, in the March quarter there<br />
was some drop which was on account of some adjustments as a<br />
result of signing up fixed fee deal with the broadcasters . But for<br />
the full year there was an almost constant content fee. Next year<br />
will also be the same because we have signed with majority of the<br />
broadcasters a deal which is not on per subscriber base but on fixed<br />
fee basis.<br />
Page 8 of 24
DISH <strong>TV</strong> INDIA LTD 4Q FY2010 TELECONFERENCE MAY 10, 2010<br />
Sameer:<br />
Jawahar:<br />
Sameer:<br />
Moderator:<br />
Aditya:<br />
Just one follow-up question. In terms of subscriber acquisitions,<br />
what do you think is driving the subscriber additions because we<br />
are seeing advertisements spends pretty much trending down, the<br />
commission speed have trended down, especially in a scenario<br />
where we are seeing increase in competitive intensity, we are<br />
seeing our telecom operators who are having DTH business pretty<br />
much offering set-top boxes at less than Rs.1000, so in this kind of<br />
a scenario how do you expect to compete with them especially if<br />
the ad spends and the commissions are trending lower<br />
During the last financial year the category had spent around Rs.<br />
650 crores on marketing and customer education. We had also<br />
spent around 15% of that. No other competing category is<br />
spending on customer education. Moreover, our offers and<br />
packaging tier etc. is the most consumer friendly. In the last<br />
financial year we had acquired about 22% of the category<br />
expansion while in the month of April this year, we did around<br />
26% of the category.<br />
Okay thank you so much for your explanation sir, thanks much<br />
good luck.<br />
Thank you. The next question is from the line of Aditya Mathur<br />
from Citigroup, please go ahead.<br />
Thank you. Sir, my question is specifically on your subscriber<br />
acquisition cost. We have seen a sequential decline to about Rs.<br />
2383, I just wanted to know what has driven this sequential<br />
decline, just the rupee appreciation or is it because of cheaper CPE<br />
cost or is it like a sign of some easing of in competitive activity<br />
Page 9 of 24
DISH <strong>TV</strong> INDIA LTD 4Q FY2010 TELECONFERENCE MAY 10, 2010<br />
Jawahar:<br />
Aditya:<br />
Rajeev:<br />
Aditya:<br />
Jawahar:<br />
Aditya:<br />
Moderator:<br />
Nitin:<br />
The rupee appreciation has been one factor and the second is that<br />
the money spent on advertisement in the quarter is lower while the<br />
numbers of subscribers acquired are higher and hence the average<br />
SAC is lower.<br />
Sir, can you give me the split between the cost of CPE and<br />
commission and marketing in this 2383<br />
Around Rs. 1700 is attributable to hardware and the balance is<br />
selling & distribution and advertisement<br />
And sir, what do you think would be the impact on the subscriber<br />
acquisition cost and the ARPUs given the subscriber growth due to<br />
the quantum of sporting events next year <br />
One good thing which has happened in the industry last year is that<br />
nobody has acquired subscribers at the basic pack (Rs.125) and<br />
everybody has moved from Rs.150 to Rs.200 for customer<br />
acquisition. In <strong>Dish</strong> <strong>TV</strong> also we had made our basic silver pack as<br />
a doormat pack in the month of March itself. The upside is that the<br />
subscription revenue and ARPU etc. will go up. And if you<br />
consider the last two years, the category acquired 6-7 million and<br />
8.5 million subscribers respectively, on an average. We will not be<br />
surprised if it is 11 million this year.<br />
Alright thank you sir.<br />
Thank you. The next question is from the line of Nitin Mohta from<br />
Macquarie, please go ahead.<br />
Thank you. My question was with relation to the cost side, on the<br />
programming cost we did hear last time that you had the non linear<br />
Page 10 of 24
DISH <strong>TV</strong> INDIA LTD 4Q FY2010 TELECONFERENCE MAY 10, 2010<br />
relationship, but if you can share more color on that Will that be<br />
the trend going forward for the next year or so or you think there<br />
are going to be changes based upon sports Just wanted to get a<br />
sense on how should we look at programming cost<br />
Jawahar:<br />
Nitin:<br />
Moderator:<br />
Ruchit:<br />
Rajeev:<br />
Ruchit:<br />
See some of the content like Sun etc. have to be paid as the<br />
subscriber grows, rest all others are on fixed fee basis.<br />
Thank you.<br />
Thank you. The next question is from the line of Ruchit Mehta<br />
from SBI Mutual Fund, please go ahead.<br />
Yes hi, just want to recheck on the Capex side, you said on the<br />
boxes you spent Rs. 550 crores last year<br />
Yes.<br />
But you know you said we added around 1.8 million new<br />
subscribers during FY10on a gross basis, that would mean that the<br />
cost of Rs. 3000 on the boxes and typically if you were on 2000<br />
odd levels…… I just wanted to cross check that<br />
Rajeev: Yes it is correct, 2750 x 1.85 million comes to around Rs. 508<br />
crores.<br />
Ruchit:<br />
Rajeev:<br />
Ruchit:<br />
And you mentioned that Rs. 1700 is on account of the box in SAC.<br />
That is the approximate amount after we receive a sum of say Rs.<br />
800 Rs.900 from the subscribers.<br />
Just wanted to get more clarity on the balance sheet, what is the<br />
current gross debt and gross cash position<br />
Page 11 of 24
DISH <strong>TV</strong> INDIA LTD 4Q FY2010 TELECONFERENCE MAY 10, 2010<br />
Rajeev:<br />
Ruchit:<br />
Rajeev:<br />
Gross debt is Rs 925 to 950 crores and will continue to be same at<br />
least for the next two-three quarters.<br />
And the cash<br />
Rs.650 crores including GDR revenue<br />
Ruchit: Broadly from the funding perspective, if you are looking at 10<br />
million for the industry, your share would be about 2 to 2.5 million<br />
subscribers Would we need any capital beyond this because Rs.<br />
650 crores is probably going to get consumed in this month, but<br />
beyond that would we be in self funding mode<br />
Rajeev:<br />
Ruchit:<br />
Moderator:<br />
Ankit:<br />
Jawahar:<br />
Ankit:<br />
We can add another 3.5 million with the projected EBITDA<br />
margin and Rs. 650 crores cash in hand. We should not require any<br />
additional cash beyond that.<br />
Okay thank you.<br />
Thank you. The next question is from the line of Ankit Kedia from<br />
Centrum Broking, please go ahead.<br />
Congratulations on the good set of numbers, sir. In one of the<br />
questions you mentioned that with the Sun Group we still have per<br />
subscriber based, could you mention which are the other<br />
broadcasters which whom we are per subscriber based content.<br />
Rest all others are on fixed fee basis.<br />
Sir because Sony claims that we do not have a fixed fee license<br />
when dealing with them so<br />
Page 12 of 24
DISH <strong>TV</strong> INDIA LTD 4Q FY2010 TELECONFERENCE MAY 10, 2010<br />
Jawahar:<br />
Ankit:<br />
Jawahar:<br />
Ankit:<br />
You ask them actually, there is no such discussion. There may be a<br />
lack of understanding.<br />
Right sir, my second question is regarding the transponder<br />
addition, when would we like to go for another transponder<br />
We had just changed our compression chain which has given us an<br />
additional capacity of one transponder within the same number of<br />
transponders we are okay with that currently.<br />
So how many channels can we additionally carry now<br />
Jawahar: Well, these are very minute details. Actually we can carry either 20<br />
standard definition channels or 6 HD channels.<br />
Ankit:<br />
Moderator:<br />
Vikash:<br />
Jawahar:<br />
Vikash:<br />
Jawahar:<br />
Thank you sir.<br />
Thank you. The next question is from the line of Vikash Mantri<br />
from ICICI Securities, please go ahead.<br />
Good afternoon sir, just a reconfirmation on the exit ARPU that<br />
you mentioned, Rs. 155 is it right sir<br />
Yes.<br />
That is after removing the 1 million subscribers which are just<br />
paying us Rs.25<br />
They will always be there because the subscribers have been<br />
acquired four months back and we would continue to acquire new<br />
subscribers, but in percentage terms the ratio will change due to<br />
higher base as a proportion to the new subscribers acquired.<br />
Page 13 of 24
DISH <strong>TV</strong> INDIA LTD 4Q FY2010 TELECONFERENCE MAY 10, 2010<br />
Vikash:<br />
Rajeev:<br />
Vikash:<br />
Rajeev:<br />
Vikash:<br />
Rajeev:<br />
Vikash:<br />
Moderator:<br />
Hiren:<br />
Rajeev:<br />
Hiren:<br />
Rajeev:<br />
Hiren:<br />
Rajeev:<br />
Okay sir just wanted to understand what was the money raised and<br />
money utilized in this quarter because the gross debt and cash<br />
positions are the same<br />
Well, the money is actually used for subscriber acquisition.<br />
How much money in this quarter<br />
We had spent around Rs. 575 crores in CapEx for the whole year.<br />
Okay and we also had money coming in from the GDR this quarter<br />
sir<br />
Money from GDR came in during the last quarter.<br />
Okay thank you.<br />
Thank you. The next question is from the line of Hiren Dasani<br />
from Goldman Sachs, please go ahead.<br />
Thank you. What was the content cost for the quarter<br />
It was around 43% of the subscription revenue.<br />
So contribution of about 57% is that correct<br />
Yes.<br />
In the notes to accounts, there is something called deviation of<br />
fund utilization pattern of Rs.264 crores which the board approved,<br />
what is that regarding<br />
This was regarding the right issue plan of expenses versus the<br />
actual utilization because the right issue was planned may be 1.5<br />
Page 14 of 24
DISH <strong>TV</strong> INDIA LTD 4Q FY2010 TELECONFERENCE MAY 10, 2010<br />
years before and in the mean time we had to emphasize more on<br />
the subscriber acquisitions. So there was some deviation in the<br />
actual plan of expense which we thought of putting in the form of a<br />
note and inform the stock exchanges.<br />
Hiren:<br />
Rajeev:<br />
Hiren:<br />
Rajeev:<br />
Hiren:<br />
Jawahar:<br />
Hiren:<br />
Moderator:<br />
Pulakeshin:<br />
Okay and one more thing is on the license fee, are we still<br />
accounting it at 10% or are we accounting net 6% of the revenues<br />
We can’t account it at 6% till the time there is a notification.<br />
Okay and last thing is in terms of your ARPU I do not understand<br />
how you would exit with Rs.155<br />
Rs.166 is the renewal ARPU, Please understand that we have Rs.<br />
138 as the blended ARPU, which will move to Rs. 155 in March<br />
2011 but Rs. 166 may be Rs. 170 or Rs.168 at that time.<br />
Okay.<br />
We had added two new packs in the month of March; Silver Saver<br />
and Gold Saver. We already have about 10% of our subscriber<br />
base on the silver saver whose price is Rs.150. The silver pack has<br />
been made into a doormat pack, so these are going to give a good<br />
effect on ARPU.<br />
Okay thank you.<br />
Thank you. The next question is from the line of Pulakeshin Shah<br />
from Jaypee Capital, please go ahead.<br />
Good morning sir. You current Capex is sufficient for how many<br />
numbers of subscribers going forward<br />
Page 15 of 24
DISH <strong>TV</strong> INDIA LTD 4Q FY2010 TELECONFERENCE MAY 10, 2010<br />
Rajeev:<br />
Pulakeshin:<br />
Rajeev:<br />
Pulakeshin:<br />
Moderator:<br />
Jamil:<br />
Rajeev:<br />
Jamil:<br />
Rajeev:<br />
Jamil:<br />
Rajeev:<br />
Jamil:<br />
Moderator:<br />
Approximately 3.5 million.<br />
Okay and another question was when do you see your figures to be<br />
free-cash flow<br />
We expect that in the first quarter of FY12.<br />
Okay thank you very much sir.<br />
Thank you. The next question is from the line of Jamil Ansari from<br />
Nomura please go ahead.<br />
Good evening sir. Just wanted to check what was the churn rate in<br />
this quarter<br />
0.8% per month.<br />
So it was slightly lesser than last quarter, okay. And secondly just<br />
a clarification, we have new offer running in which you pay three<br />
and get four months, so how would you account for revenues in<br />
this case, will you do it at pro-rata or will you take the first three<br />
months and the fourth month free, how would you account it<br />
It will be pro-rata because we have to apportion it over 120 days.<br />
Okay so this might put some pressure on ARPUs in this quarter.<br />
It has already started but it is bringing lot of other benefits and the<br />
net effect will be positive only.<br />
Okay fine thanks a lot.<br />
Thank you. The next question is from the line of Pankaj Tibrewal<br />
from Kotak Mutual Fund, please go ahead.<br />
Page 16 of 24
DISH <strong>TV</strong> INDIA LTD 4Q FY2010 TELECONFERENCE MAY 10, 2010<br />
Pankaj:<br />
In your estimation for next year, how many more subscribers will<br />
come in from the HD technology which you are talking about<br />
Jawahar: On HD I think in the total country there is almost maximum 3<br />
million display device which are high definition ready, so far the<br />
total category has done around 2000 connections.<br />
Pankaj:<br />
Jawahar:<br />
Pankaj:<br />
Okay so the category will take a long time to mature.<br />
Yes it will take some time.<br />
My third question is that once you achieved the 10 million<br />
subscribers number, what kind of EBITDA margin do you think<br />
can be sustainable and can be a real true identification of the<br />
company<br />
Jawahar: See on a steady state basis it should be at 31% to 32%.<br />
Pankaj:<br />
Moderator:<br />
Amit:<br />
Jawahar:<br />
Okay fair enough, thank you.<br />
Thank you. The next question is a follow up from the line of Amit<br />
Kumar from Kotak Securities, please go ahead.<br />
Hi thanks for the follow up. Sir, I just wanted to know, in the first<br />
half of the year your churn rate was actually quite low but picked<br />
up in the second half, so have you done some analysis on why our<br />
consumers are leaving the DTH, are they going back to cable, are<br />
they going back to some other platforms, have you tried to figure<br />
this churn rate at 10% is quite high<br />
Amit you see, in the third quarter fiscal 2010 there was a high<br />
churn, reason being that in the previous year we had acquired<br />
majority of the subscribers on a 12-month basis. When the renewal<br />
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DISH <strong>TV</strong> INDIA LTD 4Q FY2010 TELECONFERENCE MAY 10, 2010<br />
becomes due, it becomes a significant churn so that is why Q3 was<br />
higher .<br />
Rajeev:<br />
Amit:<br />
Rajeev:<br />
Amit:<br />
Jawahar:<br />
Amit:<br />
Jawahar:<br />
Amit:<br />
Yes Amit for the first two quarters, the churn was abnormally low.<br />
As per our business model around 8% to 10% is acceptable and we<br />
are well within that percentage. Below that it is impractical<br />
because at 8% to 10% the average life comes to around say 9 to 10<br />
years.<br />
Okay and sir the other point which I wanted to discuss is that, how<br />
do you define churn, I mean a customer has to stop paying you, so<br />
how long is the period before you decide to declare the churn rate<br />
It is 120 days past due.<br />
My final question relates to the Rs. 30 crores of barter advertising<br />
spent that you described, is this a continuous thing or was this oneoff<br />
in FY010 and you know you will probably have to spend more<br />
in terms of cash basis<br />
No, barter is our capacity to negotiate with the channel, which are<br />
free to air and this has been growing.<br />
Yes so, would it be fair to assume that at least these 30 crores will<br />
be there next year as well<br />
Yes it is always there and that is why our marketing spent is<br />
adjusted accordingly, we do not spend on cash basis and we use<br />
the barter capability.<br />
Thank you so much.<br />
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DISH <strong>TV</strong> INDIA LTD 4Q FY2010 TELECONFERENCE MAY 10, 2010<br />
Moderator:<br />
Shubham:<br />
Jawahar:<br />
Thank you. The next question is a follow up from the line of<br />
Shubham Majumdar from Macquarie, please go ahead.<br />
Hi thanks for the opportunity. I had two questions, one is what is<br />
the kind of dip that you have actually seen on a month-on-month or<br />
quarter-on-quarter basis in terms of net ads market share What I<br />
am trying to ask here is that, if you go back six to nine months<br />
when the level of competition in terms of number of competitors<br />
were much lower, what sort of qualitative change have you seen<br />
when you go to the marketplace in terms of how customers pick up<br />
your service vis-à-vis others because I believe your net ad market<br />
shares would have been higher than 35% a while back and now it<br />
is probably you are talking about 25% so is there any change<br />
there And secondly, little bit of a longer term structural question,<br />
all cable operators or MSOs who have been lying pretty idle in<br />
terms of competition as a medium to DTH and DTH has pretty<br />
much had field day over the last three-four years. Are we seeing a<br />
revival in terms of competition from the cable medium or likely to<br />
see some revival I think there is a lot of capital inflow from public<br />
markets as well as private equity that we are seeing in that space<br />
and a lot of cable operators are talking about very large aggressive<br />
expansion plans led by triple play and so on and so forth. So, is<br />
there any medium-to-longer term risk potentially coming on<br />
horizon from cable operators and MSOs<br />
Shubham, I will refrain myself from talking on the MSO’s model<br />
in this conference call. As far as <strong>Dish</strong> <strong>TV</strong> and its category is<br />
concerned, in the month of April <strong>Dish</strong> <strong>TV</strong> had acquired 25 - 26%,<br />
while during the whole of last year we had acquired around 22%<br />
average of the total category expansion. Our target, if this<br />
category will grow by 10 to 11 million this financial year, will be<br />
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DISH <strong>TV</strong> INDIA LTD 4Q FY2010 TELECONFERENCE MAY 10, 2010<br />
to have around 25% market share so your apprehension about the<br />
cable company funding and all that , has been taken due care of by<br />
the management.<br />
Shubham:<br />
Moderator:<br />
Shreya:<br />
Rajeev:<br />
Shreya:<br />
Jawahar:<br />
Shreya:<br />
Moderator:<br />
Shishir:<br />
Rajeev:<br />
Okay thanks very much, very reassuring.<br />
Thank you. The next question is from the line of Shreya Bhansali<br />
from Wealth Management, please go ahead.<br />
Hello, sir actually I wanted to ask what exactly do you mean by a<br />
net subscriber base and a gross subscriber base.<br />
Those subscribers who have not paid for their services for a<br />
continuous period of 120 days.<br />
Sir one more thing if the set-top box experiences a technical<br />
problem and it does not work and if you acquire a new set-top box<br />
is there any cost involved<br />
Yes, if it is within the one year warranty period, it is free else it<br />
comes to our service center where we charge service fee.<br />
Thank you sir.<br />
The next question is from the line of Shishir Manuj from Mangal<br />
Keshav Securities, please go ahead.<br />
Just two quick clarifications, one was on the commissioning cost<br />
per sub, compared to Q3 has it gone up in Q4<br />
No rather it has gone down by around Rs.20-Rs.25 as compared to<br />
the average commission payable on a per sub basis.<br />
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DISH <strong>TV</strong> INDIA LTD 4Q FY2010 TELECONFERENCE MAY 10, 2010<br />
Shishir:<br />
Rajeev:<br />
Shishir:<br />
Moderator:<br />
Shubham:<br />
Jawahar:<br />
Okay. And second, if I understand it right this business is a<br />
negative working capital; I am talking about just the business part<br />
Yes it is.<br />
Thank you that is it.<br />
Thank you. The next question is a follow up from the line<br />
Shubham Majumdar from Macquarie, please go ahead.<br />
Just thought that I will grab your attention towards the economics<br />
of the HD services. I understand that customers are actually paying<br />
much higher in terms of the initial commitment from their end for<br />
the set-top box. What exactly is the economics of the HD services<br />
that we are rolling out relative to what we have seen in the past<br />
from the normal customer base Is it a significantly better option in<br />
terms of economics<br />
You see one company has already done it and they are charging<br />
Rs.100 extra per month for HD subscriber and two or three HD<br />
channels. I think we will have to leave some space for this<br />
category to at least take off; the set-top box has not taken off yet.<br />
2,000 is a very insignificant number to talk about and let me tell<br />
you that HD and all such things are futuristic. The broadcaster has<br />
to have their channels broadcast in high definition. The consumer<br />
also has to have their high-definition display device television and<br />
also they should be willing to pay for it. So it is a long way to go, I<br />
think it will take at least two years to become a significant<br />
proposition. So, at this moment we are not that worried except that<br />
we have to launch and be ready in the market very soon.<br />
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DISH <strong>TV</strong> INDIA LTD 4Q FY2010 TELECONFERENCE MAY 10, 2010<br />
Shubham:<br />
Jawahar:<br />
I was talking more from point of view of opportunity there, I think<br />
somebody having launch is probably not reason to get worried<br />
because the game is still very much on, right. I just wanted to<br />
know what incremental cost of a set-top box on HD with recording<br />
facility relative to the normal set-top box that you are currently<br />
rolling out and secondly, what is the estimate that you have on how<br />
many television sets in India would be HD ready at this point in<br />
time, if you can put any color please<br />
Shubham, the pricing part and at what price are we going to buy<br />
that is competitive information which we would like to reserve for<br />
the time being. Mr. Salil Kapoor will answer your other question.<br />
Salil: LCD and Plasma market for this year is estimated to be around 3<br />
million sets and close to 50% of that would be HD. Safely around<br />
1.5 million high definition sets will be rolled out in the market this<br />
year. We can safely assume that there is about 0.5 million to about<br />
three quarter of a million sets already lying, so it could be<br />
somewhere around 2.25 million sets which are HD enabled out<br />
there in the market.<br />
Shubham:<br />
Moderator:<br />
Rohit:<br />
Jawahar:<br />
Right okay thanks very much for the color.<br />
Thank you. The next question is a follow up from the line of Rohit<br />
Dokania from B&K Securities, please go ahead.<br />
Thank you for giving this opportunity again. Just wanted to know<br />
how many record and play set-top boxes would be there in the<br />
market, this year basically<br />
Only 20,000 have gone to the consumer’s home and the DTH<br />
operators. The manufactured quantity must be around 1.5 lakhs.<br />
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DISH <strong>TV</strong> INDIA LTD 4Q FY2010 TELECONFERENCE MAY 10, 2010<br />
Rohit:<br />
Moderator:<br />
Ankit:<br />
Jawahar:<br />
Salil:<br />
Ankit:<br />
Rajeev:<br />
Jawahar:<br />
Ankit:<br />
Jawahar:<br />
Great sir thanks.<br />
Thank you. The next question is a follow up from the line of Ankit<br />
Kedia from Centrum Broking, please go ahead.<br />
Sir, I just wanted to know, what is the commission on recharge<br />
coupons that we are giving to distributo<br />
4.5 to 4.75% and it is likely to go down in future.<br />
Yes and it is consolidated between the dealer and the distributor, so<br />
about 1%-1.5% is with the distributor and the rest of with the<br />
dealers.<br />
Sir why is it expected to come down<br />
Because the volume is going up so their ROI is still maintained and<br />
rather improving.<br />
Mr. Kedia the total category has collected around Rs. 3,500 crores<br />
in financial year 2010 and is expected to collect around Rs.6, 000<br />
crores in this financial year, so more and more people are entering<br />
this category. The same thing happened with telecom. Telecom<br />
started with 6% to 7%, we also gave 6% and now we have reduced<br />
it to 4.5% while telecom is giving 3- 3.5% only. As the industry<br />
reaches gross turnover of Rs. 10,000 crores this is certainly going<br />
to come down.<br />
Sure, sir are all the players doing this together or is this a <strong>Dish</strong> <strong>TV</strong><br />
initiative<br />
Well, so far our recharge distributors are exclusive but going<br />
forward they may become multi-brand distributors.<br />
Page 23 of 24
DISH <strong>TV</strong> INDIA LTD 4Q FY2010 TELECONFERENCE MAY 10, 2010<br />
Ankit:<br />
Moderator:<br />
Tarun:<br />
Thank you sir.<br />
Thank you. As we have no further questions, I would like to hand<br />
the floor back to the management of <strong>Dish</strong> <strong>TV</strong> for closing<br />
comments. Please go ahead sir.<br />
Thanks Melissa. Ladies and gentlemen thank you for joining us,<br />
we soon hope to have a transcript of the call on our website<br />
www.dishtv.in. We look forward to speaking to you at the end of<br />
the first quarter of fiscal 2011 or even earlier on one-one basis,<br />
thank you and have a great day.<br />
# This transcript has been suitably edited for ease of reading.<br />
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