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Subscriber addition has accelerated for entire industry
Dish TV added 1.4 mn subscribers in H1FY11 and is likely to add 1.8 mn in
H2FY11. The entire industry added 1.4 mn in October and 1.9 mn in November
and is likely to add 1-1.1 mn subscribers in December and 3.3-3.5 mn in
Q4FY11. Dish TV expects ~12 mn subscriber addition in FY11 and ~ 11 mn in
FY12 for overall industry. Management stated the company is striving to corner
~28-30% share of this in a six-player market. Dish TV now has 9.2 mn gross
and 7.3 mn net subscribers and expects the momentum in subscriber addition to
continue till industry touches 55 mn subscriber base (from the current 30 mn).
Rural and smaller towns growing at a faster clip
As per IRS, ~76% of DTH subscribers are from smaller towns and rural areas.
This augurs well for Dish TV in light of its strategy of focusing more on smaller
towns and rural areas. In top cities, cable players are more aggressive and
charge only for one connection in multi-TV homes cable companies, rendering
DTH more expensive.
Cut in entry price has been positive
Packages are now available at below INR 1,000 (INR 1,690 earlier), which has
led to significant impact on consumer psyche. However, there is no significant
negative impact on Dish TV as now only one month free content is provided
instead of three months earlier.
Premiumisation underway
Dish TV expects an exit ARPU of INR 150-155 in FY11E. Q3FY11 is likely to see
some improvement Q-o-Q with subscribers uptrading to higher value packages.
Outlook and valuations: Attractive; maintain ‘BUY’
We are bullish on the Indian pay TV market. Dish TV is at an inflection point with
expected higher growth on back of low penetration, favourable regulatory
environment, increasing margins, and strong balance sheet. Hence, we maintain
‘BUY/Sector Performer’ recommendation/rating on the stock.
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