Dish TV India - Prime Time; Result Update Q3FY15 :: Edelweiss

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Dish TV put up a scintillating Q3FY15 performance. Key positives were: (i) robust INR5 QoQ increase in ARPU to INR177; (ii) strong incremental market share of 28% (up 800bps YoY, 100bps QoQ ) which yielded 0.42mn net subscriber additions (highest in past 8 quarters); (iii) churn stable at 0.7%; and (iv) 466bps YoY and 264bps QoQ improvement in EBITDA margin to 26.8% (highest in 9 quarters). Our confidence is anchored by the improved incremental market share, likely increase in ARPU especially from RIO, Phase 3 digitisation and likely benefit of GST. Dish TV continues to be amongst our top picks. Maintain ‘BUY’ with TP of INR100.

FCF generation steady in spite of uptick in subscriber additions

Dish TV’s net subscriber base stands at 12.5mn. Incremental HD subscriber additions (of total additions) surged to ~17% (15% in Q2FY15). Free cash flow (FCF) stood at INR298mn (INR110mn in Q2FY15, INR583mn in Q3FY14). Ad spends dipped 12.1% YoY and 29.9% QoQ to INR124mn. After-tax loss stood at INR29mn vis-à-vis loss of INR382mn in Q3FY14 and loss of INR151mn in Q2FY15.

Q3FY15 con-call: Key takeaways

Apart from contemplating price hikes, Dish TV is considering differentiated pricing between existing digitised markets of Phase 1 & 2 and to be digitised markets of Phase 3 & 4. Dish TV’s content deals with STAR and ZEE will expire in September 2016. Similarly, content deals with Indiacast and Sony will expire in March 2017 and March 2018, respectively. Zing’s incremental market share ranges from 18-35% in its markets.

LINK
https://www.edelweiss.in/research/Dish-TV-India--Prime-Time;-Result-Update-Q3FY15/28097.html