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Cable TV - India
Cable digitalisation gets go
ahead from I&B ministry
I&B ministry approves digitalisation
The Information & Broadcasting (I&B) ministry has in its final report approved
TRAI’s (regulatory authority) recommendation for digitalisation of cable networks
in India. The I&B ministry has fixed March 31, 2012 as the sunset date for
digitalisation of all cable networks in the four metro cities (Mumbai, Kolkata, Delhi
& Chennai) and implementation of all four phases (Metros, Tier 2./3 cities) by Dec
2014. This is in response to TRAI’s revised recommendation for digitalisation in
Metros by Dec 2011 and across the country in four phases by Dec 2013. I&B
ministry approval provides the much needed impetus for digitalisation, though a
cabinet approval is still required for implementation
Hathway .. a key beneficiary
We believe Hathway remains one of the key beneficiaries of digitalisation given
strong presence in Metros i.e. Delhi (25% market share) & Mumbai (40% market
share). Hathway has 2.3mn subscribers in Delhi & Mumbai. Given analogue
nature of industry, Hathway gets paid for less than 10% of its subscriber base and
should be able to unlock revenues from its existing subscriber base in a digital
environment.
Turnaround in financials likely
We forecast 2x jump in revenues and 5x jump in PBIT for Hathway over next two
years from implementation in Metros. See further upside to earnings from digital
roll out in other tier 2/3 cities as well.
Stock to re-rate
Our PO of Rs130 is at 6x EV/EBITDA at lower end of 6-9x EV/EBITDA multiples
enjoyed by global peers such as Comcast during digitalisation phase in US
markets. We see scope for valuations to expand to 9x as clarity emerges on time
lines for implementation.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Cable TV - India
Cable digitalisation gets go
ahead from I&B ministry
I&B ministry approves digitalisation
The Information & Broadcasting (I&B) ministry has in its final report approved
TRAI’s (regulatory authority) recommendation for digitalisation of cable networks
in India. The I&B ministry has fixed March 31, 2012 as the sunset date for
digitalisation of all cable networks in the four metro cities (Mumbai, Kolkata, Delhi
& Chennai) and implementation of all four phases (Metros, Tier 2./3 cities) by Dec
2014. This is in response to TRAI’s revised recommendation for digitalisation in
Metros by Dec 2011 and across the country in four phases by Dec 2013. I&B
ministry approval provides the much needed impetus for digitalisation, though a
cabinet approval is still required for implementation
Hathway .. a key beneficiary
We believe Hathway remains one of the key beneficiaries of digitalisation given
strong presence in Metros i.e. Delhi (25% market share) & Mumbai (40% market
share). Hathway has 2.3mn subscribers in Delhi & Mumbai. Given analogue
nature of industry, Hathway gets paid for less than 10% of its subscriber base and
should be able to unlock revenues from its existing subscriber base in a digital
environment.
Turnaround in financials likely
We forecast 2x jump in revenues and 5x jump in PBIT for Hathway over next two
years from implementation in Metros. See further upside to earnings from digital
roll out in other tier 2/3 cities as well.
Stock to re-rate
Our PO of Rs130 is at 6x EV/EBITDA at lower end of 6-9x EV/EBITDA multiples
enjoyed by global peers such as Comcast during digitalisation phase in US
markets. We see scope for valuations to expand to 9x as clarity emerges on time
lines for implementation.
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