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DEN NETWORKS
OUTPERFORMER (RS143, MCAP: RS18.7BN / US$415M)
• Promoted by Sameer Manchanda, DEN Networks forayed into cable distribution in late 2007. An aggressive
management and US$65m invested by IL&FS and EMSAF have helped DEN cover significant ground within a short
span of time via acquisitions. DEN has emerged as one of the fastest growing MSOs with a reach of ~10m homes and
1.3m paying homes.
• Star-DEN JV: In January 2008, DEN entered into the syndication business through a 50:50 JV with Star Network. The
JV is an aggregator and distributor of 29 channels (Star Network and NDTV Group channels among others) across
India, Nepal and Bhutan on analogue cable, digital cable as also the DTH platform. Being part of one of the largest
MSOs, Star-DEN JV is better placed to ensure higher collections from the cable industry. For DEN, the deal also offers
stability and higher returns at low capital involvement.
• Digitization – the way forward: Having acquired critical mass (reach of 10m+ and a 1.3m paying subscriber base) and
raised Rs3.6bn of public equity, DEN’s focus is shifting from ‘customer acquisition’ to ‘digitization’ and
‘monetization’. While digitization would reduce the risk of losing LCOs (or subscribers), monetization would happen
through higher declaration rather than ARPU growth. DEN has recently raised Rs3.6bn through public issuance.
These funds are planned to be largely utilized for upgrading the existing infrastructure as also for digitization.
• At the end of Q2FY11, DEN had a digital subscriber base of 425,000. It expects the pace of digitization to intensify
hereon and is currently estimated to be adding 50,000+ digital subscribers per month. It is targeting to add 1m digital
subscribers annually. As digitization gathers momentum, declaration levels would improve (currently at <15%) and,
thereby, underpin strong growth in profitability for DEN.
• Regulatory push towards digitization: In a major positive for the Indian TV distribution space, the I&B Ministry has
given its approval for the TRAI recommendations announced earlier and proposed a revised schedule for digitization
in the country. In August 2010, TRAI had announced key recommendations for the Indian TV distribution space,
including a sunset date of December 2013 for complete migration from analogue to digital TV distribution services.
The I&B Ministry has written to TRAI proposing a revised schedule for the same – indicating a sunset date of March
2015 for the country. The regulatory push towards digitization in the country could potentially underpin faster
growth in the overall TV distribution industry. Cabinet approval is the final step for these proposals to get
implemented and is likely in the next three months.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
DEN NETWORKS
OUTPERFORMER (RS143, MCAP: RS18.7BN / US$415M)
• Promoted by Sameer Manchanda, DEN Networks forayed into cable distribution in late 2007. An aggressive
management and US$65m invested by IL&FS and EMSAF have helped DEN cover significant ground within a short
span of time via acquisitions. DEN has emerged as one of the fastest growing MSOs with a reach of ~10m homes and
1.3m paying homes.
• Star-DEN JV: In January 2008, DEN entered into the syndication business through a 50:50 JV with Star Network. The
JV is an aggregator and distributor of 29 channels (Star Network and NDTV Group channels among others) across
India, Nepal and Bhutan on analogue cable, digital cable as also the DTH platform. Being part of one of the largest
MSOs, Star-DEN JV is better placed to ensure higher collections from the cable industry. For DEN, the deal also offers
stability and higher returns at low capital involvement.
• Digitization – the way forward: Having acquired critical mass (reach of 10m+ and a 1.3m paying subscriber base) and
raised Rs3.6bn of public equity, DEN’s focus is shifting from ‘customer acquisition’ to ‘digitization’ and
‘monetization’. While digitization would reduce the risk of losing LCOs (or subscribers), monetization would happen
through higher declaration rather than ARPU growth. DEN has recently raised Rs3.6bn through public issuance.
These funds are planned to be largely utilized for upgrading the existing infrastructure as also for digitization.
• At the end of Q2FY11, DEN had a digital subscriber base of 425,000. It expects the pace of digitization to intensify
hereon and is currently estimated to be adding 50,000+ digital subscribers per month. It is targeting to add 1m digital
subscribers annually. As digitization gathers momentum, declaration levels would improve (currently at <15%) and,
thereby, underpin strong growth in profitability for DEN.
• Regulatory push towards digitization: In a major positive for the Indian TV distribution space, the I&B Ministry has
given its approval for the TRAI recommendations announced earlier and proposed a revised schedule for digitization
in the country. In August 2010, TRAI had announced key recommendations for the Indian TV distribution space,
including a sunset date of December 2013 for complete migration from analogue to digital TV distribution services.
The I&B Ministry has written to TRAI proposing a revised schedule for the same – indicating a sunset date of March
2015 for the country. The regulatory push towards digitization in the country could potentially underpin faster
growth in the overall TV distribution industry. Cabinet approval is the final step for these proposals to get
implemented and is likely in the next three months.
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