ARPU disappoints
Dish TV posted Q4FY13 results below expectations with 7.5%YoY growth in revenues (2.3% below expectations) on the back of 0.2mn net subscriber addition with ARPU declining by Rs3 sequentially to Rs157 as subscribers downgraded to lower price point packages along with fewer number of days during the quarter. Operating margin declined by 22bps on the back of higher programming cost due to renegotiation of contract with MediaPro. We believe the recent increase in STB prices along with hike in package rates will augur well in the medium term as this will reduce churn along with subscriber acquisition cost though marginally impacting subscriber addition. With increasing focus on value & profitability, we maintain BUY rating on the stock.
Results below expectations: Dish TV posted 7.5% revenue growth to Rs5554mn on the back of 15.3%YoY growth in subscription revenues. Operating profit was at Rs1200mn up by 6.4%YoY with margins declining by 22bps. PAT loss was at Rs436mn. Exchange differences from foreign currency borrowing accounted as per AS-16 is now being accounted as AS-11. This change has resulted in net gain of Rs594mn which has been shown as exceptional item in FY13. The company has also reclassified its Q4FY12 results based on audited financials.
Subscriber addition in-line: In Q4FY13 the company added 0.4mn gross subscribers while net subscribers were 0.2mn with churn reducing to 0.8%. In FY13, total net subscriber addition was 1.1mn while gross subscriber addition was 2.2mn. Total net subscribers stand at 10.7mn. Subscriber addition during the quarter was low as the company increased STB prices by Rs300 in February. Going forward, management expects the net subscriber addition at ~1.1mn with marginal upside from Phase-II digitization. STB price hike has resulted in lowering SAC to Rs1996 during the quarter from Rs2201 in Q3FY13. Management expects this to further decline to ~Rs1600 over the next 2/3 quarters
ARPU disappoints: During the quarter the company posted Rs3 drop in ARPU on a sequential basis on the back of lower days in Q4FY13 compared to Q3FY13 and customers downgrading to lower price point packages. Average blended ARPU for FY13 was at Rs158 with management guiding Rs166 ARPU for FY14 on the back of the price hike in April 2013. HD ARPU for the quarter was at Rs414.
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Dish TV posted Q4FY13 results below expectations with 7.5%YoY growth in revenues (2.3% below expectations) on the back of 0.2mn net subscriber addition with ARPU declining by Rs3 sequentially to Rs157 as subscribers downgraded to lower price point packages along with fewer number of days during the quarter. Operating margin declined by 22bps on the back of higher programming cost due to renegotiation of contract with MediaPro. We believe the recent increase in STB prices along with hike in package rates will augur well in the medium term as this will reduce churn along with subscriber acquisition cost though marginally impacting subscriber addition. With increasing focus on value & profitability, we maintain BUY rating on the stock.
Results below expectations: Dish TV posted 7.5% revenue growth to Rs5554mn on the back of 15.3%YoY growth in subscription revenues. Operating profit was at Rs1200mn up by 6.4%YoY with margins declining by 22bps. PAT loss was at Rs436mn. Exchange differences from foreign currency borrowing accounted as per AS-16 is now being accounted as AS-11. This change has resulted in net gain of Rs594mn which has been shown as exceptional item in FY13. The company has also reclassified its Q4FY12 results based on audited financials.
Subscriber addition in-line: In Q4FY13 the company added 0.4mn gross subscribers while net subscribers were 0.2mn with churn reducing to 0.8%. In FY13, total net subscriber addition was 1.1mn while gross subscriber addition was 2.2mn. Total net subscribers stand at 10.7mn. Subscriber addition during the quarter was low as the company increased STB prices by Rs300 in February. Going forward, management expects the net subscriber addition at ~1.1mn with marginal upside from Phase-II digitization. STB price hike has resulted in lowering SAC to Rs1996 during the quarter from Rs2201 in Q3FY13. Management expects this to further decline to ~Rs1600 over the next 2/3 quarters
ARPU disappoints: During the quarter the company posted Rs3 drop in ARPU on a sequential basis on the back of lower days in Q4FY13 compared to Q3FY13 and customers downgrading to lower price point packages. Average blended ARPU for FY13 was at Rs158 with management guiding Rs166 ARPU for FY14 on the back of the price hike in April 2013. HD ARPU for the quarter was at Rs414.
Operating margin decline: Operating margin during the quarter was down by 22bps on the back of programming cost increasing by 34%YoY and 21% QoQ on the back of renegotiation of contract with MediaPro. Programming cost increased by 5.1% YoY for FY13 against the guidance of 10-12%. Management has guided a hike of 8-10% for FY14. Commission to dealers increased by 27% YoY on the back of higher payout while admin & other expenses declined by 36% YoY and 13.9% QoQ. For FY13, OPM of the company expanded by 129bps on the back of topline growth.
Estimates revised downwards; Maintain BUY: Based on lower subscriber addition and ARPU, we are revising our revenue estimates downwards by 5.1%/11.4% for FY14/FY15 respectively which has lowered PAT by 45%/44%. The company is currently trading at 9.5x and 7.2x FY14/FY15 EV/EBIDTA and with its focus on value and profitability, we maintain BUY rating on the stock with a revised target price of Rs71 (10.5x FY14E and 8x FY15E EV/EBIDTA).
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