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DITV reported weaker-than-expected 2Q earnings on account of one-off items
that include Rs190MM pre-payment of commissions on set top boxes shipped
ahead of the festive season and Rs304MM MTM notional forex loss on USD
debt. ARPU for the quarter improved to Rs152 with exit ARPU of Rs154.
Management expects FY12E exit ARPU of Rs160-165. Subscriber additions
slowed during the quarter, even as management maintained full-year
guidance of 3-3.5MM gross additions.
Operating performance stable. DITV added 0.58MM new subscribers in
Q2FY12 and 1.3MM new subscribers in 1H. Management noted that they have
seen good uptick in additions in Sep and Oct, ahead of the festive season and
maintains their guidance of 3-3.5 new subscriber additions for FY12E. ARPUs
improved to Rs152 (+1% QoQ) driven by consumer upgrades and higher HD
contribution. Subscriber acquisition cost (SAC) increased 9% QoQ to Rs2, 232
on higher marketing spend.
Digitisation to boost DTH. Management indicated that the cable digitisation
ordinance expected in 4Q would open up more opportunities for DTH players.
Cable operators would have to incur huge investments in infrastructure and
marketing to penetrate the analog cable market. Further, ARPUs would have to
go up for cable operators as carriage fees go down and cable system becomes
more transparent. DTH players with their existing set up and HD offerings are
in a much better competitive position to benefit from cable digitisation vs. cable
operators.
On track for 4Q free cash break-even. Revenues up 5% QoQ (+48% YoY)
driven by 0.3MM net subscriber adds QoQ and 1% QoQ ARPU improvement.
EBITDA margins up 90bps QoQ, excluding pre-payment of commissions
(which are paid on shipments vs. revenues which are booked on activation),
EBITDA margins are up 480bps QoQ. Reported net loss is Rs486MM,
excluding one-offs, DITV would have reported profit of Rs4MM.
Retain OW and Sep-12 PT of Rs100: Our PT is based on 15x Sep-13E
EV/EBITDA. Key risks include increasing competition pressuring pricing,
adverse regulatory changes, and content cost re-negotiation. We are keenly
watching the ARPU and cash generation trend, which we believe are critical to
stock performance from here on.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
DITV reported weaker-than-expected 2Q earnings on account of one-off items
that include Rs190MM pre-payment of commissions on set top boxes shipped
ahead of the festive season and Rs304MM MTM notional forex loss on USD
debt. ARPU for the quarter improved to Rs152 with exit ARPU of Rs154.
Management expects FY12E exit ARPU of Rs160-165. Subscriber additions
slowed during the quarter, even as management maintained full-year
guidance of 3-3.5MM gross additions.
Operating performance stable. DITV added 0.58MM new subscribers in
Q2FY12 and 1.3MM new subscribers in 1H. Management noted that they have
seen good uptick in additions in Sep and Oct, ahead of the festive season and
maintains their guidance of 3-3.5 new subscriber additions for FY12E. ARPUs
improved to Rs152 (+1% QoQ) driven by consumer upgrades and higher HD
contribution. Subscriber acquisition cost (SAC) increased 9% QoQ to Rs2, 232
on higher marketing spend.
Digitisation to boost DTH. Management indicated that the cable digitisation
ordinance expected in 4Q would open up more opportunities for DTH players.
Cable operators would have to incur huge investments in infrastructure and
marketing to penetrate the analog cable market. Further, ARPUs would have to
go up for cable operators as carriage fees go down and cable system becomes
more transparent. DTH players with their existing set up and HD offerings are
in a much better competitive position to benefit from cable digitisation vs. cable
operators.
On track for 4Q free cash break-even. Revenues up 5% QoQ (+48% YoY)
driven by 0.3MM net subscriber adds QoQ and 1% QoQ ARPU improvement.
EBITDA margins up 90bps QoQ, excluding pre-payment of commissions
(which are paid on shipments vs. revenues which are booked on activation),
EBITDA margins are up 480bps QoQ. Reported net loss is Rs486MM,
excluding one-offs, DITV would have reported profit of Rs4MM.
Retain OW and Sep-12 PT of Rs100: Our PT is based on 15x Sep-13E
EV/EBITDA. Key risks include increasing competition pressuring pricing,
adverse regulatory changes, and content cost re-negotiation. We are keenly
watching the ARPU and cash generation trend, which we believe are critical to
stock performance from here on.
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