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Dish TV India Ltd
In-line Performance: Stay EW
Quick comment – we think most positives are
currently being priced in. We await a better entry
opportunity to participate in and gain from the ongoing
digitization process in India.
Dish TV reported good 1QF12 EBITDA of Rs1,122m:
That was up 249% YoY and 24% QoQ and 4% higher
than our expectation. There was a net loss of Rs183m
vs. our estimated loss of Rs187m. EBITDA margin stood
at 24.4%. expanding 353bps sequentially.
Given the slippage in ARPU in 1QF12 versus our
expectation, there may be some downside risk to our
earnings estimates, though we shall take a fresh look in
2-3 months. Also, content cost was a negative surprise
for the Street, so we may see some consensus earnings
downgrades.
Key Highlights of the quarter and post earnings call:
1) ARPU was flat QoQ at Rs150, lower than our
estimate of Rs55. ARPU was flattish QoQ, since in
4QF11 there was some one-off support from cricket.
Sizeable competition and a lower proportion of HD
subscribers also played a role.
2) Gross subscriber base expanded by 0.725 in
1QF12 to 11.2m.Net subs base rose to 8.9m at
1QF12 end, in line with our estimates. We think this
is quite creditable, especially with the slowdown
after the cricket season.
3) Subscriber Acquisition Cost has decreased from
Rs2224 to Rs2058 in 1QF12. We estimate it to be
Rs2038 for F12. This was supported by increased
CPE (Consumer Premise Equipment) prices. Apart
from the Rs150 increase in February 2011, DTIL
has also increased CPE prices by Rs150 in July
2011. Some decrease in selling and distribution
expenses have also aided SAC reduction in 1QF12
4) Programming costs per sub decreased 12% YoY but were
up 13% QoQ to Rs59. That was largely in line with our
estimates. We think the Street was disappointed on this
parameter. As a proportion of revenues, programming
costs stand at 34% versus 30% in 4QF11 and 40% in
1QF11. The company maintains its guidance of a 12-15%
increase for F12 with another contract due for negotiation
in September.
5) Churn went up slightly to 1.1%. DTIL expects this to fall to
1% near term.
6) Commission expenses were slightly lower than our
expectations at Rs308m. These were Rs326m in 1QF11
and Rs476m in 4QF11. They have come down as a) DTIL
has consciously decreased the activation and recharge
commissions to distributors and b) gross additions have
also declined.
7) Personnel costs stood at Rs174m, up 42% YoY. However
they decreased 2.8% sequentially due to the bonus
payouts in 4QF11.
Some more highlights of the conference call
• Exit F12 ARPU guidance of Rs162-Rs165 .We are
assuming Rs162 for 4QF12 and Rs157 for full year F12.
• F12 gross subs addition target of 3.2m -3.5m (we are
taking 3.5m).
• At 1QF12 end gross debt was about Rs10.5b. Cash stood
at Rs3.7b.
• Current cash on the balance sheet is sufficient for DTIL’s
capex plans for F12.
• As the company has increased its one-time price for
customers closer to Rs1,400, churn should decrease
slightly.
• Interest costd should fall slightly as INR debt is being
converted into foreign currency loans.
• Lease rental income was Rs550m in the quarter. We are
forecasting Rs2.24b for full-year F12.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Dish TV India Ltd
In-line Performance: Stay EW
Quick comment – we think most positives are
currently being priced in. We await a better entry
opportunity to participate in and gain from the ongoing
digitization process in India.
Dish TV reported good 1QF12 EBITDA of Rs1,122m:
That was up 249% YoY and 24% QoQ and 4% higher
than our expectation. There was a net loss of Rs183m
vs. our estimated loss of Rs187m. EBITDA margin stood
at 24.4%. expanding 353bps sequentially.
Given the slippage in ARPU in 1QF12 versus our
expectation, there may be some downside risk to our
earnings estimates, though we shall take a fresh look in
2-3 months. Also, content cost was a negative surprise
for the Street, so we may see some consensus earnings
downgrades.
Key Highlights of the quarter and post earnings call:
1) ARPU was flat QoQ at Rs150, lower than our
estimate of Rs55. ARPU was flattish QoQ, since in
4QF11 there was some one-off support from cricket.
Sizeable competition and a lower proportion of HD
subscribers also played a role.
2) Gross subscriber base expanded by 0.725 in
1QF12 to 11.2m.Net subs base rose to 8.9m at
1QF12 end, in line with our estimates. We think this
is quite creditable, especially with the slowdown
after the cricket season.
3) Subscriber Acquisition Cost has decreased from
Rs2224 to Rs2058 in 1QF12. We estimate it to be
Rs2038 for F12. This was supported by increased
CPE (Consumer Premise Equipment) prices. Apart
from the Rs150 increase in February 2011, DTIL
has also increased CPE prices by Rs150 in July
2011. Some decrease in selling and distribution
expenses have also aided SAC reduction in 1QF12
4) Programming costs per sub decreased 12% YoY but were
up 13% QoQ to Rs59. That was largely in line with our
estimates. We think the Street was disappointed on this
parameter. As a proportion of revenues, programming
costs stand at 34% versus 30% in 4QF11 and 40% in
1QF11. The company maintains its guidance of a 12-15%
increase for F12 with another contract due for negotiation
in September.
5) Churn went up slightly to 1.1%. DTIL expects this to fall to
1% near term.
6) Commission expenses were slightly lower than our
expectations at Rs308m. These were Rs326m in 1QF11
and Rs476m in 4QF11. They have come down as a) DTIL
has consciously decreased the activation and recharge
commissions to distributors and b) gross additions have
also declined.
7) Personnel costs stood at Rs174m, up 42% YoY. However
they decreased 2.8% sequentially due to the bonus
payouts in 4QF11.
Some more highlights of the conference call
• Exit F12 ARPU guidance of Rs162-Rs165 .We are
assuming Rs162 for 4QF12 and Rs157 for full year F12.
• F12 gross subs addition target of 3.2m -3.5m (we are
taking 3.5m).
• At 1QF12 end gross debt was about Rs10.5b. Cash stood
at Rs3.7b.
• Current cash on the balance sheet is sufficient for DTIL’s
capex plans for F12.
• As the company has increased its one-time price for
customers closer to Rs1,400, churn should decrease
slightly.
• Interest costd should fall slightly as INR debt is being
converted into foreign currency loans.
• Lease rental income was Rs550m in the quarter. We are
forecasting Rs2.24b for full-year F12.
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