Dish TV has achieved the 9 mn subscriber mark;: Edelweiss

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Dish TV (DITV IN, INR 64, BUY)
Dish TV has achieved the 9 mn subscriber mark; on track to achieve 3 mn
acquisition target for FY11

�� Subscriber addition picks up further
Dish TV had reached the 8 mn subscribers mark in the last week of August 2010. It has
added 1 mn subscriber in less than three months taking the total subscriber base to 9
mn. Having already added 2.1 mn subscribers since April 2010, Dish TV seems well on
track to achieve 3 mn plus subscriber acquisition target for FY11. It is also expected to
benefit from the cricket heavy season in the fourth quarter.


�� Fund raising to aid in step up in subscriber addition
Dish TV has taken an enabling resolution to raise USD 200 mn through equity issuance.
We believe this could be because of a greater pace of subscriber addition (industry likely
to add 12-13 mn annually against the estimated 8-9 mn). Fund raising would enable
Dish TV to maintain its leadership with an incremental market share of ~27-28%; it is
subject to approvals from FIPB, MIB (I&B ministry) apart from the AGM.

�� Q2FY11 performance was well above expectations
The Q2FY11 revenues stood at INR 3,261 mn, up 26.7% Y-o-Y. ARPU per month stood at
INR 139. Dish TV hiked prices across two popular packs towards the end of Q2FY11, the
impact of which would be visible in the forthcoming quarters. EBITDA margins expanded
sharply from 10.6% in Q1FY11 to 15.3% in Q2FY11 on the back of operating leverage
benefits, arising from fixed content cost deals and robust subscriber additions. Content
cost (as a percentage of subscription revenues) dropped to an all-time low of 39%.
Selling and distribution expense (as a percentage of sales) declined 160bps Q-o-Q.
Subscriber acquisition cost (SAC) is down to INR 2,083 in Q2FY11 from INR 2,147 in the
previous quarter. Losses at the PAT level in Q2FY11 stood at INR 452 mn against INR
632 mn in Q1FY11.