Changing content deals…. • Hathway Cable :: ICICI Securities, link

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ZEE-Hathway Rapprochement, A Win-Win Situation :: Edelweiss PDF link

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TRACKING TECHNICALS - MTT BUY CALL ON HATHWAY CABLE & DATACOM:: anand rathi

HATHWAY CABLE

TRACKING TECHNICALS - MTT BUY CALL ON HATHWAY CABLE & DATACOM

SCRIP NAME : HATHWAY CABLE & DATACOM         SECTOR :     MEDIA & ENTERTAINMENT              Date : 25^th OCTOBER , 2012

CURRENT TREND : BULLISH               Time Horizon :  0 - 3 Months

Buy in the Range of  Rs.225 - Rs.240         Stop loss :Rs.208  (ON CLOSING BASIS )

TARGET: Rs.280

Hathway Cable & Datacom - Uninterrupted reception; visit note; Buy :: Edelweiss PDF link

Hathway Cable & Datacom (HATH IN, INR 233, Buy)

We recently interacted with Mr. G Subramaniam, CFO, Hathway Cable & Datacom (Hathway). The company is confident of seeding boxes within the October 31 deadline. It is well placed for digitisation as 75% of its subscriber base lies in Phase 1 & 2 areas. However, the full benefit of digitisation on subscription revenues in Phase 1 will be apparent only from Q1FY14 (lag of two quarters). With rapid digital subscriber additions, Hathway continues to execute the best amongst all MSOs. Maintain ‘BUY’.

Cable & Satellite Industry: Sector Update- ICICI Securities, PDF link

Sector Update -Cable & Satellite Industry:


C o u n t d o w n   t o   s u n s e t  d a t e   f o r   P h a s e   I …
As the digitisation deadline of June 30, 2012 for Phase I approaches,
differences exist among the various parties involved in extending or
persisting with the same deadline. While the broadcasters have been
lobbying the government to stick to the existing deadline, some of the
MSOs (barring the large ones like Hathway Cable and Den Networks)
and LCOs have asked for an extension of two or three months as they
are finding it hard to seed set top boxes in all their households due to
late announcement of the revenue share model by Trai, unavailability
of set top boxes and lack of consumer awareness. MSO’s problems
could be a blessing for DTH operators who are gearing up to speed up
their subscriber addition. However, Hathway is best placed among
MSOs, having already seeded 40%  or ~1 million of its ~2.3 million
subscribers in the metros and having an inventory of ~ 0.7 million
STBs. Nonetheless, we expect at least a three month delay in
implementation of digitisation even if the deadline is not extended.
The final call will be taken by the ministry of Information &
Broadcasting on June 25, 2012.

http://content.icicidirect.com/mailimages/ICICIdirect_DigitisationDeadline.pdf

Hathway Cable & Datacom - Padding up for the digital revolution: Edelweiss PDF link

Hathway Cable & Datacom (Hathway) is well equipped for the impending June 30 deadline for Phase 1 of digitisation. As per Ministry of Information & Broadcasting (MIB) data, only ~24% (2.9mn) set top boxes have been seeded, out of the total 12.3mn required. Out of these, Hathway alone has seeded 0.9mn boxes (40% penetration of its universe) and is the best prepared MSO. Even though the government, as of now, remains firm on meeting the Phase 1 deadline, we expect a ~3-6 months’ delay. This delay is a minor hiccup as major stakeholders remain committed to digitisation. Also, Hathway will now offer 20 HD channels, one of the highest amongst both MSOs and DTH operators, which will aid digitisation and improve ARPU. Though the stock has outperformed the Sensex ~43% since our initiating coverage report on January 17, 2012, we remain positive on the stock over the longer term. Maintain ‘BUY’.  

Hathway Cable & Datacom: All set, ready to go!: SPA Sec

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Hathway Cable & Datacom Ltd. (Hathway) is a leading Multi System Operator (MSO) in India with active
subscriber base of ~8.8mn. It is also the largest cable operator to offer broadband services in the country. With
Government mandate of compulsory digitization, we see significant change in cable industry dynamics with
substantial boost in revenues for MSOs on the back of complete disclosure of subscribers by Local Cable
Operators (LCOs). With strong network and wide presence across key states in the country, we believe Hathway
is suitably placed to capture the big digitization opportunity.

Hathway Cable & Datacom- all set to ride the digitisation wave ::PINC,

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Hathway Cable & Datacom- all set to ride the digitisation wave
Hathway, the MSO with largest paying subscriber base of 1.8mn, is all set to
be the major beneficiary from compulsory digitisation. We expect a
turnaround in the business with strong traction in its profitability post Phase I
and Phase II of the sunset clause of mandatory digitisation. We believe changing
business strategy, strong execution capabilities and market leadership in the
metros would enable the company to monetise the digitisation opportunity.
We initiate coverage on the company with a ‘BUY’ recommendation on the
stock with a target price of Rs151(7.5x EV/EBITDA FY14E).
Paying subscriber base to augment 41% CAGR over FY12-FY14E
Currently Hathway reaches 8.7mn homes of which their digital subscriber base is
1.7mn with 40% market share in Mumbai and 30% in Delhi. We believe digitisation to
be a big kicker for MSOs like Hathway which will enable them to increase the revenue
and profitability manifold. With improved subscriber declaration post phase I and phase
II, the business is all set for a turnaround. We believe the company would be able to
capture 2.8mn paying subscriber post Phase I (32% of its current subscriber base)
and 5mn post Phase II (58% of its current subscriber base).
Blended offering allows for better Broadband penetration
The company has leveraged its cable infrastructure to provide Broadband services,
a high gross profit margin business. With 0.4mn broadband subscribers, this segment
contributes 14% to total revenue with 70% gross margins. Cross selling of broadband
to existing digital cable subscribers will help increase broadband penetration offering
attractive bundled packages to customers. We expect the company to achieve
0.48mn broadband subscriber base by FY13E and 0.53mn by FY14E.
Higher operating leverage to expand margins and thus profitability
We expect first round of digitisation gains to flow in with marked improvement in
revenue growth and less disproportionate increase in operational cost. With improved
paid subscriber base and faster growth in broadband business, we expect revenue
to show 20% CAGR (FY11-FY14E). With high operating leverage, we expect OPM
to expand to 23% by FY14E from 17% in FY11. We expect resultant PAT to be
868mn in FY14E from a loss of Rs236mn in FY11.
VALUATIONS & RECOMMENDATION
At CMP, the stock is trading at 7.5x FY13E EV/EBIDTA and 5.8x FY14E EV/
EBIDTA. With digitisation a reality, sustained leadership in its key markets, improved
business dynamics of cable and broadband businesses and clarity in profitability
makes Hathway a very attractive play in digitisation space. We initiate coverage on
the Company with a ‘BUY’ recommendation on the stock with a target price of
Rs151(7.5x EV/EBITDA FY14E). We have valued the stock on average of DCF,
EV/Subscribers and EV/EBITDA(taking Comcast and Time Warner as peers)

Hathway Cable and Datacom::India’s Future Large Caps :: Morgan Stanley

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Hathway Cable and Datacom Ltd.
Digitization to Unleash Growth


We expect mandatory digitization to substantially
increase the addressable market and spur earnings
growth. EV/EBITDA multiple of 6.1x (F13e) indicates
upside in view of our projected EBITA CAGR of 31%
over F11-13. Our PT of Rs138 suggests 19% upside.
Key Catalysts: (1) Progress on rollout of first phase of
digitization in 1HCY12. (2) Shake out of the LCO in
apprehension of digitization thus paving the way for further
increase in addressability, by mid CY12. (3) Perceptible
improvement in margin trend for Hathway likely to be seen in
quarterly results, by 2HCY12
Key Investor Debate: (1) Will mandatory digitization happen
– While the market seems to be skeptical we think it will
happen, even if with some delay. (2) Who wins – DTH or
cable? The market feels DTH industry will win the TV
distribution market and that the cable industry will lose. We
think both DTH as well as digital cable will show meaningful
increases in their returns and profitability while analog cable
will be the loser. (3) What happens to C&P fees after
digitization? The market’s perception is that it will drop close to
zero immediately after the first one or two phases of
digitization. We think it will take 6-7 years to fall to 10-12% of
its current levels.
Risks to our Call:
1) Consumer opposition results in a lack of progress on
implementation of digitization over the next 3-5 quarters.
2) Little success in getting a digital premium of Rs10-15/
month from consumers who opt for digitization: This
could happen if consumers resist paying for enhanced quality
and/or MSOs find it difficult to recover this amount from LCOs
amid lack of progress on digitization
3) DTH penetration runs ahead of our expectation,
mandatory digitization fails to take off and LCOs remain
recalcitrant. Our bear case encapsulates this scenario,
implying Hathway’s subscriber base would start shrinking but
margin enhancement would be elusive.



See full list -click link below:

India’s Future Large Caps :: Morgan Stanley

Hathway (Buy, PO Rs140) 􀂄 BofA Merrill Lynch,

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Hathway (Buy, PO Rs140)
􀂄 We forecast revenue to jump 2x and EBIT to jump10x over the next 4-5
years, led by implementation of the cable digitalization Bill. The Bill was
recently passed through an ordinance and has been introduced in Parliament
for discussion and approval.
􀂄 We expect Hathway to benefit the most, given its strong market share in
metro cities (Delhi 25%) and Mumbai (40%) and Tier 2 cities. Nearly 80% of
Hathway’s cable TV subscribers reside in Phase I/ Phase II locations, which
have been earmarked to be digitalized by March 2013.
􀂄 We expect the stock to re-rate as clarity emerges on its revenue-sharing
agreement with local cable operators (LCOs). We factored in 25% revenue to
be shared with LCOs in our estimates.
􀂄 Hathway should also gain from its strong presence in the cable broadband
business. The company intends to offer bundled services (cable and
broadband) to its subscribers, which will be a key differentiator.
􀂄 The stock trades at 6x our EV/EBITDA in FY13E vs. 11x for Dish TV. While
we have raise target multiples to 7x, it has the potential to re-rate to 9x as
clarity emerges on the digitalization Bill’s clearance and the revenue-sharing
agreement with local cable operators.

UBS:: Hathway Cable - Digitisation gets cabinet approval

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UBS Investment Research
Hathway Cable & Datacom
Digitisation gets cabinet approval
[ EXTRACT]
􀂄 Government has passed an ordinance to mandate digitisation
Based on our meetings with various media industry participants, we believe the
government was working on an ordinance to approve mandatory cable digitisation in
India. This received cabinet approval today. As per the timelines finalised by the
Ministry of Information Broadcasting (MIB), the whole of India is likely to switch to
digital signals by December 2014 in four phases.
􀂄 We assume mandatory digitisation in our estimates from FY13 onwards
We forecast revenue will grow 12% and EBITDA 34% in FY13, led by Phase I of the
digitisation process. Hathway Cable & Datacom (Hathway) reaches 8.7m subscriber
homes, but it only gets paid for 1.8m. We assume: 1) 82% of the 8.7m homes will form
part of the Phase I and II implementation; 2) around 60% of the undeclared homes
would remain with Hathway after digitisation, with approximately 40% churning to
DTH; and 3) placement revenue will decline 70% to Rs1.35bn by FY16.
􀂄 Hathway benefits from cable digitisation
We believe the recent government approval is a key catalyst for Hathway’s share price.
We think Hathway remains a long-term growth story and benefits from cable
digitisation in India. We estimate a worst-case value of Rs100/share based on
conservative assumptions, while our best-case estimate is Rs200/share. However,
execution remains key for a share price re-rating, in our view.
􀂄 Valuation: maintain Buy; Rs130.00 price target
We value Hathway at 9x FY13E EV/EBITDA. While we maintain our Buy rating on
the company, we prefer Dish TV due to its better execution and earnings visibility.


􀁑 Hathway Cable & Datacom
Hathway Cable & Datacom (Hathway) began operations in 1998. It is one of
India's leading cable multi-system operators with a pan-India presence. It
distributes cable TV on digital and analogue platforms, and provides broadband
services. Its cable services reaches 8.2m homes. It has a backend network of 71
analogue and 19 digital head-ends, and 15,000km of hybrid fibre-coaxial
network. The Rajan Raheja group holds a 50.6% stake in the company.
􀁑 Statement of Risk
We believe the key risk for Hathway is poor execution. Other risks include
intense competition from DTH as well as regulatory risks. Placement costs could
decline to zero if there is complete digitisation.

Hathway Cable :: Disappointment over slow growth priced in, BUY :Kim Eng

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Y‐T‐D the stock is down 51% as investors fear that delay in cable
digitisation bill and loss of market share to ’DTH’ service providers is
slowing growth for HATH. After the recent fall HATH is an attractive
BUY because 1) I&B and Telecom ministry have confirmed that the
bill would be passed in parliament by Dec, 2) HATH has continued
voluntary digitization in Q1 and added 90K pay TV subscribers and
3) HATH is trading at an EV/EBIDTA of 8x which is less than half of
peer Dish TV. Our TP of Rs150 on HATH is based on discounted CF.
Subsidized pricing supports subs addition in cable, broadband
Untill the digitization bill forces conversion of analog cable homes
into digital, HATH would add subs thru voluntary digitization. For
FY12, we expect 26% increase in pay TV subs to 2.4m (Subs at Q1 end
is 1.9m) HATH’s new broadband services have got good response due
to its offer of 12GB downloads at a price of Rs1500.
Cost savings, increased placement fee to support FY12F GM of 27%
We forecast FY12F GM to rise 250 bp. This is driven by new channels
which is helping increasing placement fee (+25%) and savings in
admin cost (Rs20m in FY12). HATH repaid high cost debt which would
cut interest cost by Rs120m for FY12.
Net cash of Rs1.1bn to support digitization of 1.5m subs in 2 yrs
HATH spends Rs700/subscriber for distributing set top boxes to carry
out voluntary digitisation. Its subs acquisition cost of Rs750 is lower
than Rs1500 for DTH.
Approval for mandatory cable digitization would be a trigger
HATH’s underlying fundamentals remain strong despite the delay in
legislation. We like HATH because it has lesser subs acquisition cost
compared to DTH and a better B/S. We expect the gap between
HATH’s valuation of Rs1.5k/sub vs Rs8k/sub of Dish TV to narrow.

Hathway Cable (HAWY.BO, Buy, PT Rs130, 50% upside) UBS: India Mid-Caps TOP PICKS - September 2011

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• One of the largest cable multiple system operator (MSO) in
India with ~8.7m cable homes reached; offers digital cable
and cable broadband
• Long-term growth story and a theme play on cable
digitization
• Increase in digital cable subscriber base led by rising income
levels and likely implementation of mandatory digitalization
in medium term
• Estimate 415,000 digital subscriber additions in FY12;
expect analogue subs to increasingly upgrade to the better
quality digital platform
• Expect Hathway to add 20,000 primary subscribers every
year during FY12-14
• Execution in terms of digital and paying subscriber additions
is the key for stock price re-rating; likely to be net profit
break-even in FY12
• Shareholding: promoters – 67%
• Valuation: EV/EBITDA - value at 8.5x FY13E EV/EBITDA

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Hathway Cable & Datacom 􀂃 Presence in CAS areas positions as leading digital player:: Macquarie Research

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Hathway Cable & Datacom
􀂃 We recently met with the management of Hathway (HATH IN) to understand
the outlook for the Indian cable players, business drivers of the company, and
its positioning vs. the offerings of other vendors.
􀂃 The company is promoted by the Raheja group, and global media
conglomerate Newscorp holds a 16% stake in the company.
Presence in CAS areas positions as leading digital player
􀂃 Over 1 million digital cable subscribers. Hathway is one of the largest
cable TV providers in the country, having a subscriber base of ~8.5m. The
company’s digital subscriber base stands at close to 1.4m – representing 18%
of its subs base. This is higher than that of its closest competitor Den
Networks (DEN IN, Rs42, NR), which has 7% of its subscriber base on a
digital platform. The reason for this performance is Hathway’s strong position
in the Mumbai and Delhi markets, which have been CAS compliant since
2007.
􀂃 Revenue mix equally split between subs and carriage & placement. Like
most cable operators, Hathway has equal revenue share flowing in from
subscription revenues from customers and carriage and placement fees
charged to TV broadcasters. Though the digitisation theme is likely to play out
for cable operators as well, we think the pressure on carriage and placement
fees might hurt the profitability of the cable operators.
Bundling strategy might not yield desired result
􀂃 Low broadband penetration offer opportunity… India’s internet penetration
is extremely low at ~2%. Hathway believes that it is in a unique position to
provide both TV and internet services by leveraging the last mile connectivity.
We recognise the latent demand for internet services, but do not think the
bundling strategy is an effective marketing tool to increase digital cable uptick.
􀂃 …but dilutes the focus on cable in capital scarce market. The other point
of contention with broadband expansion is prioritising the use of cash in
difficult markets. For digital cable to flourish in India, we believe the
consolidation of LCOs (Local Cable Operators) and the seeding of set top
boxes is crucial.
􀂃 Balance sheet cushioned from IPO cash infusion. Hathway raised
Rs4.8bn from its IPO in February 2010. The company has spent Rs113m on
customer acquisitions and Rs7bn on digital capex. The current net cash on
the balance sheet stands at ~Rs1bn.
Risks & valuation
􀂃 Scale advantage of DTH players missing. Hathway has one of the largest
cable subscriber bases in the industry. Even so, at 1.4m digital customers, the
DTH operators have established a commendable lead in the space. We
recognise that the valuation differential between Dish TV (DITV IN, Rs81.45,
Outperform, TP: Rs95.00) (16x FY12E EV/EBITDA) and Hathway (6x
EV/EBITDA, based on Bloomberg estimates) is stark, but we believe that the
industry structure favours the DTH platform.

UBS : Hathway Cable & Datacom - Management meeting takeaways

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UBS Investment Research
Hathway Cable & Datacom
M anagement meeting takeaways
􀂄 Takeaways from meeting with Hathway CFO post 1QFY12 results
1) Hathway lowered its FY12 digital subs addition guidance from 800k to 500k
(UBS-e 415k) as it believes phase I of digitization deadline could get delayed by 1-
2 quarters. 2) Hathway has started offering higher bandwidth broadband plans (2 /
5 mbps) and has raised package prices, which led to ~Rs25 improvement in
broadband ARPU in 1Q. 3) Hathway believes cost cutting initiatives and higher
placement revenues (management estimates FY12 placement revenues to grow
15% vs. UBS-e 10%) will contribute to EBITDA growth in the next 2-3 quarters.
􀂄 Maintain earnings estimates for FY12
Based on the recent quarterly disclosure, we calculate 1Q consolidated EBITDA to
be Rs407m (+9% yoy) – this is ahead of UBS-e Rs360m and consensus estimate of
Rs350m. We are 18-24% below consensus on FY12-13E EBITDA forecast. We
assume mandatory digitisation will get implemented in FY13.
􀂄 Hathway benefits from cable digitisation
Hathway remains to be a long-term growth story and a play on cable digitisation in
India. We believe implementation of mandatory digitisation is imminent and would
benefit Hathway, given it has digital cable infrastructure in place and subs reach of
8.7m homes – 82% of which is a part of Phase I and Phase II implementation.
􀂄 Valuation: Maintain Buy with PT of Rs130, execution key to re-rating
We value Hathway at 8.5x FY13E EV/EBITDA. We believe execution remains
key for Hathway’s stock price re-rating. We prefer Dish TV due to its better
execution and earnings visibility.


􀁑 Hathway Cable & Datacom
Hathway Cable & Datacom (Hathway) began operations in 1998. It is one of
India's leading cable multi-system operators with a pan-India presence. It
distributes cable TV on digital and analogue platforms, and provides broadband
services. Its cable services reaches 8.2m homes. It has a backend network of 71
analogue and 19 digital head-ends, and 15,000km of hybrid fibre-coaxial
network. The Rajan Raheja group holds a 50.6% stake in the company.
􀁑 Statement of Risk
We believe the key risk for Hathway is poor execution. Other risks include:
intense competition from DTH, regulatory risks, and placement revenue could
decline to zero in case of complete digitisation.

UBS :: Hathway Cable & Datacom - Execution is key for re-rating

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UBS Investment Research
Hathway Cable & Datacom
Execution is key for re-rating

„ Event: stock underperforms on poor execution; digitisation imminent
Hathway’s stock price has underperformed the BSE Sensex 53% since February
2010, in our view mainly due to disappointing financial performance and poor
execution led by supply side constraints, resistance from local cable operators to
seed digital set top boxes, and increased competition from the direct-to-home
(DTH) platform. We  believe mandatory digitisation is imminent, likely to be
implemented from 31 March 2012—we view this as a key catalyst.
„ Impact: significant reduction in earnings estimates due to poor execution
Given the slower execution in the past, we lower our estimates for FY12-13
significantly. We lower our FY12/13 EPS estimates from Rs4.06/5.51 to
Rs0.31/2.19. We revise our forecasts beyond FY12 assuming mandatory
digitisation will be implemented starting March 2012. We assume 82% of
Hathway’s 8.2m subscriber homes reach is under Phase I and II implementation,
and it will be able to retain 60% of undeclared subscriber base.
„ Action: maintain Buy; Hathway trading close to our worst-case value
We maintain our Buy rating as we believe Hathway will gain from digitisation. We
believe there is limited downside at current levels, if digitisation gets necessary
government approvals. We estimate a worst-case value of Rs100 per share based
on conservative assumptions, while our best-case estimate is Rs200.
„ Valuation: lower price target to Rs140 from Rs275
We switch our valuation methodology from DCF-based to EV/EBITDA multiplebased given limited earnings visibility in the medium term. We value Hathway at
9x FY13E EV/EBITDA, a 15% discount to broadcasters and a 35% discount to
Dish TV. We prefer Dish TV due to its better execution and earnings visibility.


Q Hathway Cable & Datacom
Hathway Cable & Datacom (Hathway) began operations in 1998. It is one of
India's leading cable multi-system operators with a pan-India presence. It
distributes cable TV on digital and analogue platforms, and provides broadband
services. Its cable services reaches 8.2m homes. It has a backend network of 71
analogue and 19 digital head-ends, and 15,000km of hybrid fibre-coaxial
network. The Rajan Raheja group holds a 50.6% stake in the company.
Q Statement of Risk
We believe the key risk for Hathway is poor execution. Other risks include
intense competition from DTH and regulatory risks. Placement costs could
decline to zero in case of complete digitisation.

UBS :: Hathway Cable & Datacom - Execution is key for re-rating

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UBS Investment Research
Hathway Cable & Datacom
Execution is key for re-rating
 
„ Event: stock underperforms on poor execution; digitisation imminent
Hathway’s stock price has underperformed the BSE Sensex 53% since February
2010, in our view mainly due to disappointing financial performance and poor
execution led by supply side constraints, resistance from local cable operators to
seed digital set top boxes, and increased competition from the direct-to-home
(DTH) platform. We  believe mandatory digitisation is imminent, likely to be
implemented from 31 March 2012—we view this as a key catalyst.
„ Impact: significant reduction in earnings estimates due to poor execution
Given the slower execution in the past, we lower our estimates for FY12-13
significantly. We lower our FY12/13 EPS estimates from Rs4.06/5.51 to
Rs0.31/2.19. We revise our forecasts beyond FY12 assuming mandatory
digitisation will be implemented starting March 2012. We assume 82% of
Hathway’s 8.2m subscriber homes reach is under Phase I and II implementation,
and it will be able to retain 60% of undeclared subscriber base.
„ Action: maintain Buy; Hathway trading close to our worst-case value
We maintain our Buy rating as we believe Hathway will gain from digitisation. We
believe there is limited downside at current levels, if digitisation gets necessary
government approvals. We estimate a worst-case value of Rs100 per share based
on conservative assumptions, while our best-case estimate is Rs200.
„ Valuation: lower price target to Rs140 from Rs275
We switch our valuation methodology from DCF-based to EV/EBITDA multiplebased given limited earnings visibility in the medium term. We value Hathway at
9x FY13E EV/EBITDA, a 15% discount to broadcasters and a 35% discount to
Dish TV. We prefer Dish TV due to its better execution and earnings visibility.


Q Hathway Cable & Datacom
Hathway Cable & Datacom (Hathway) began operations in 1998. It is one of
India's leading cable multi-system operators with a pan-India presence. It
distributes cable TV on digital and analogue platforms, and provides broadband
services. Its cable services reaches 8.2m homes. It has a backend network of 71
analogue and 19 digital head-ends, and 15,000km of hybrid fibre-coaxial
network. The Rajan Raheja group holds a 50.6% stake in the company.
Q Statement of Risk
We believe the key risk for Hathway is poor execution. Other risks include
intense competition from DTH and regulatory risks. Placement costs could
decline to zero in case of complete digitisation.

Hathway Cable & Datacom- Strong upside from digitalisation :: BofA Merrill Lynch,

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Hathway Cable & Datacom Ltd
   
Strong upside from
digitalisation
We organized investor meetings with Hathway in the US where management
highlighted opportunities from impending digitalisation.
„Reiterates strong upside from digitalisation
With nearly 80% of its subscribers residing in Phase I and Phase II locations, both
revenues and profitability likely to see strong growth over next 2-3 years from
implementation of digital cable TV roll out in India. We expect cable subscription
revenues to double and PBIT to increase 6x over next two years from
implementation of mandatory digitalisation. While I&B ministry have approved the
digitalisation process, the bill requires government approval and is expected to be
tabled in the current monsoon session. Retain Buy rating with PO of Rs130.
Expects industry to consolidate post digitalisation
While management is reluctant on acquiring local cable operators (LCOs) given
high valuation expectations, it expects smaller LCOs to partner with players such
as Hathway given investments required in digitalisation. Also multi system
operators and large operators are well placed to adhere to regulations such as
underground laying of cables as mandated by a few states such as Hyderabad
and Delhi.

Hathway Cable & Datacom- Gearing up for digitalisation ::BofA Merrill Lynch,

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Hathway Cable & Datacom Ltd
   
Gearing up for digitalisation
„In-line results, margins tad lower
Hathway reported in-line results, with 4Q revs of Rs2.4bn vs. Rs2.5bn BofAMLe.
EBITDA margin of 14% was 200bps lower than expected and impacted by higher
pay channel cost and higher provisioning for bad debts. We retain our estimates
and maintain Buy rating, given our view that revenues and EBIT are likely to jump
2x and 5x over next two years from the implementation of regulations to roll out
digital services in metros. We see further upside from the implementation in other
tier 2/3 cities. While our target multiple is at 6x EV/EBITDA, we see scope for
valuation multiples to expand to 9x, as clarity emerges on timelines for digitalisation.

Hathway Cable and Datacom -Remain OW on Valuation; Potential from Digitization :: Morgan Stanley

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Hathway Cable and Datacom Ltd.
Remain OW on Valuation;  Potential from Digitization
What's Changed
Price Target  Rs258.00 to Rs138.00
F11e EPS  From Rs.1.9 to -Rs.1.5
 F12e, F13e EPS  Down 78% and 51%
We remain positive from a one-year perspective:
Cable market conditions still look tough currently, and
we are mindful of the poor success of Hathway’s LCO
consolidation strategy. We prefer DTIL (OW), since
strong catalysts for Hathway may take 2-3 quarters to
emerge. Yet after a 28% YTD decline, we view
valuations favorably. Also, over the next 6-8 quarters,
Hathway’s revenue growth and margin trends should
improve substantially from current levels.