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Dish TV India
Rajasthan govt waives entertainment tax
Entertainment tax waived in Rajasthan with immediate effect
The state government of Rajasthan has waived DTH operators from paying
entertainment tax in a notification dated 9 March 2011. Previously, an
entertainment tax of 10% of revenues was levied on DTH operators. As per the
Telecom Regulatory Authority of India (TRAI), Rajasthan has less than 2m cable
homes, which constitutes c3% of all Indian cable homes.
UBS view: likely to be marginally positive for Dish TV
Given the low cable penetration, we believe Rajasthan could be a significant
market for DTH operators. The Business Standard has earlier reported that Dish
TV is the leading DTH operator in this area. If we assume the entertainment tax
paid in Rajasthan constitutes 5-7% of Dish TV's total entertainment tax outflow
currently, we would expect FY12 EBITDA margins to improve by c35-40bps due
to this notification, all else remaining equal.
Maintain positive view on Dish TV due to strong subscriber growth
Dish TV is the only listed pure exposure to India’s fast growing DTH subscriber
base led by rising income levels, increasing consumer awareness, a sports-heavy
calendar in 2011, and lowered prices of new connections. We believe it is on track
to achieve c3.5m gross additions in FY11E. It added more than 300k subs in
January 2011 and is likely to report strong additions in February-March 2011 due
to the ICC Cricket World Cup. Dish TV is also likely to grow subscribers at the
premium end given its strong HD offering (now provides 30 channels in HD
format).
Valuation: maintain Buy rating with DCF-based price target of Rs77
We derive our price target from a DCF-based methodology and explicitly forecast
long-term valuation drivers using UBS’s VCAM tool.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Dish TV India
Rajasthan govt waives entertainment tax
Entertainment tax waived in Rajasthan with immediate effect
The state government of Rajasthan has waived DTH operators from paying
entertainment tax in a notification dated 9 March 2011. Previously, an
entertainment tax of 10% of revenues was levied on DTH operators. As per the
Telecom Regulatory Authority of India (TRAI), Rajasthan has less than 2m cable
homes, which constitutes c3% of all Indian cable homes.
UBS view: likely to be marginally positive for Dish TV
Given the low cable penetration, we believe Rajasthan could be a significant
market for DTH operators. The Business Standard has earlier reported that Dish
TV is the leading DTH operator in this area. If we assume the entertainment tax
paid in Rajasthan constitutes 5-7% of Dish TV's total entertainment tax outflow
currently, we would expect FY12 EBITDA margins to improve by c35-40bps due
to this notification, all else remaining equal.
Dish TV is the only listed pure exposure to India’s fast growing DTH subscriber
base led by rising income levels, increasing consumer awareness, a sports-heavy
calendar in 2011, and lowered prices of new connections. We believe it is on track
to achieve c3.5m gross additions in FY11E. It added more than 300k subs in
January 2011 and is likely to report strong additions in February-March 2011 due
to the ICC Cricket World Cup. Dish TV is also likely to grow subscribers at the
premium end given its strong HD offering (now provides 30 channels in HD
format).
Valuation: maintain Buy rating with DCF-based price target of Rs77
We derive our price target from a DCF-based methodology and explicitly forecast
long-term valuation drivers using UBS’s VCAM tool.
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