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DISH TV
OUTPERFORMER (RS57, MCAP: RS60BN / US$1.3BN)
• Dish TV, promoted by Essel Group, has been a DTH pioneer in India. Having commenced operations in 2005, the
company already had a 1.5m subscriber base before competition from Tata Sky (launched in 2006). As of 31 December
2010, Dish TV had a gross subscriber base of 9.4m and a net subscriber base of 7.7m.
• DTH industry – strong momentum: The DTH industry in India has shown strong growth and currently forms 30% of
the C&S households in the country (at 30m subscribers). The industry essentially is a six-player market in which Dish
TV leads with a 31% market share, followed by Tata Sky (20%), Sun Direct (17%), Bharti Airtel (16%), Reliance (9%)
and Videocon (7%).
• Strong performance: Dish TV, the industry pioneer, has maintained its leadership position in spite of intense
competition by heavyweights. It has witnessed strong subscriber growth and added 1m+ subscribers in Q3FY11. It
added 310,000 subscribers in January and expects to add 1m subscribers in Q4FY11. The management is also focused
on improving ARPUs, which currently stand at Rs142. Accordingly, Dish TV has stopped offering the base package to
new subscribers and has increased prices across packages by 10%.
• Economics to improve: Dish TV’s business model enjoys a superior operating leverage, with its key cost component –
content cost – being fixed. Dish TV has entered into fixed fee deals with most broadcasters and is thereby witnessing
an improvement in profitability as the subscriber base widens. Over 30% of other operating costs like transmission
cost, transponder charges, advertising cost, etc., remain relatively fixed. Subscriber acquisition costs (SAC) currently
stand at ~Rs2150 and, with competition remaining firm in the DTH industry, the management expects SAC to remain
at current levels in the near term. Given the strong pace of subscriber additions and operating leverage in the
business, Dish TV is expected to achieve PAT breakeven in H2FY12.
• 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 �� ��
DISH TV
OUTPERFORMER (RS57, MCAP: RS60BN / US$1.3BN)
• Dish TV, promoted by Essel Group, has been a DTH pioneer in India. Having commenced operations in 2005, the
company already had a 1.5m subscriber base before competition from Tata Sky (launched in 2006). As of 31 December
2010, Dish TV had a gross subscriber base of 9.4m and a net subscriber base of 7.7m.
• DTH industry – strong momentum: The DTH industry in India has shown strong growth and currently forms 30% of
the C&S households in the country (at 30m subscribers). The industry essentially is a six-player market in which Dish
TV leads with a 31% market share, followed by Tata Sky (20%), Sun Direct (17%), Bharti Airtel (16%), Reliance (9%)
and Videocon (7%).
• Strong performance: Dish TV, the industry pioneer, has maintained its leadership position in spite of intense
competition by heavyweights. It has witnessed strong subscriber growth and added 1m+ subscribers in Q3FY11. It
added 310,000 subscribers in January and expects to add 1m subscribers in Q4FY11. The management is also focused
on improving ARPUs, which currently stand at Rs142. Accordingly, Dish TV has stopped offering the base package to
new subscribers and has increased prices across packages by 10%.
• Economics to improve: Dish TV’s business model enjoys a superior operating leverage, with its key cost component –
content cost – being fixed. Dish TV has entered into fixed fee deals with most broadcasters and is thereby witnessing
an improvement in profitability as the subscriber base widens. Over 30% of other operating costs like transmission
cost, transponder charges, advertising cost, etc., remain relatively fixed. Subscriber acquisition costs (SAC) currently
stand at ~Rs2150 and, with competition remaining firm in the DTH industry, the management expects SAC to remain
at current levels in the near term. Given the strong pace of subscriber additions and operating leverage in the
business, Dish TV is expected to achieve PAT breakeven in H2FY12.
• 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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