Dish TV - Launches cheaper, innovative HD recorder :: Edelweiss

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Dish TV has launched a HD digital video recorder (DVR) which will enable subscribers to record TV content. It has been launched at an aggressive price of INR2,690 (competition offers at INR4,890-5,990 with in-built hard disc). We expect this to benefit Dish TV because it fills an important gap in its product offering and also improves brand perception which will be critical in phase 1 and 2 (has top end customers) of mandatory digitization. Also, the lower pricing strategy will help add higher HD subscribers, boosting ARPUs. Key risks/concerns are late entry in the HD DVR segment and increased subsidy burden (if any). Although near term slowdown in DTH subscriber additions continues, major triggers for the stock could be benefits from the digitization mandate and strengthening of the INR (imports STB and has USD loan). We maintain ‘BUY’.

Lower pricing strategy reiterates aggression

Dish TV has launched a HD DVR at INR2,690, much cheaper than peers. Moreover, it is being offered at no extra cost to both new and existing HD subscribers. Tata Sky offers the HD DVR facility at INR5,990, Videocon d2h and Airtel at INR4,990 and Reliance Big TV at INR4,890. Unlike other DTH providers, viewers need to use their own storage device in Dish TV to store the recorded content, thereby providing virtually unlimited recording facility.

Move will improve brand perception

We believe this fills a significant gap in Dish TV’s offering as the DVR is being offered by four other DTH service providers. The new offering’s promotion will be part of Dish TV’s INR250mn marketing blitz which is aimed at promoting its new positioning. The company expects the HD DVR launch to double its existing ~0.25mn HD subscriber base. Currently, Dish TV’s HD ARPU is ~INR400 versus overall ARPU of INR152.

Outlook and valuations: Positive over long term; maintain ‘BUY’

We expect Dish TV to benefit during the digitization process due to its innovation, aggression and high brand recall. At CMP of INR64, the stock is trading at EV/EBITDA of 15.7x and 10.7x FY12E and FY13E, respectively. We maintain‘BUY’ recommendation and assign ‘Sector Performer’ rating to the stock.