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DISH TV INDIA LIMITED
INVESTOR PRESENTATION
JUNE 2010
1
DISCLAIMER
Some of the statements made in this presentation are forward-looking statements and are based on the current beliefs, assumptions, expectations, estimates, objectives and projections of the directors and management of Dish TV India Limited about its business projections of the directors and management of Dish TV India Limited about its business and the industry and markets in which it operates.
These forward-looking statements include, without limitation, statements relating to d i Th d “b li ” “ ti i t ” “ t” “ ti t ” revenues and earnings. The words “believe”, “anticipate”, “expect”, “estimate”,
“intend”, “project” and similar expressions are also intended to identify forward looking statements.
These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond the control of the Company and are difficult to predict. Consequently, actual results could differ materially from those expressed or forecast in the forward-looking statements as a result of among other expressed or forecast in the forward looking statements as a result of, among other factors, changes in economic and market conditions, changes in the regulatory environment and other business and operational risks. Dish TV India Limited does not undertake to update these forward-looking statements to reflect events or circumstances that may arise after publication.
2
ABOUT US
India’s pioneer DTH service provider; the only listed pure-play DTH company in the country.
Consistent market leader with more than 33% subscriber share currently.
Part of the
Essel group: Having diverse presence across media, packaging, entertainment, technology enabled services, infrastructure development and education development and education.
&
Z N k I di ’ fi d h ’ l f ll i d di d Zee Network: India’s first and the country’s largest fully integrated media and entertainment conglomerate.
Promoted and led by Subhash Chandra, Chairman, Essel group of companies, a Promoted and led by Subhash Chandra, Chairman, Essel group of companies, a thought leader and a pioneer in most of his businesses.
3
INDIA DTH INDUSTRY OVERVIEW
4
OPPORTUNITIES GALORE
KEY STATISTICS:Total HHs 232.7 mn.
TV HHs 136.3 mn.
TV Penetration 58.6%
C&S HHs 105.0mn.
C&S Penetration (TVHHs) 77%
DTH HHs 22 mn.
DTH Penetration (C&S) 20 9%
Increasing TV penetration, likely to be 64% in 2013 from around 59% currently.
DTH Penetration (C&S) 20.9%
Amongst the largest pay TV markets in the world. C&S penetration likely to be 88% by 2013 from 77% currently.
DTH penetration still has plenty of room for growth. Source: MPA 2009 report 5
ENCOURAGING TRENDS IN DTH TRACTION
50%
60%
70%58.5% 61.2%
63.9% 64.3% 63.9% 63.7% 63.5% 63.3% 63.2%
20%
30%
40%
8.6% 13.1%16.9% 20.0% 22.4%
24.4%
1 0% 2 0% 4.0%
12.0%17.0% 21.0% 24.0%
26.0% 28.0%% Cable HHs to TV HHs
% DTH HHs to TV HHs
% DTH HHs to Pay TV HHs
0%
10%0.4% 0.9% 2.9%
1.0% 2.0%
30
35
40
24.1
29.5
34.137.8
DTH driving digitization & growth in pay-TV HHs28% CAGR 2008-13
10
15
20
25
1 1 3 6
11.1
17.9
24.1Rapidly increasing DTH penetration; likely to
be28% by 2013.
An estimated 60% of all new C&S subscribers up to 2018 expected to opt
60
5
2006 2007 2008 2009 2010p 2011p 2012p 2013p
1.1 3.6 2018 expected to opt for a DTH connection.
DTH Sub. Base in MillionSource: MPA 2009 report
IMPORTANT MILESTONES
25 VOLUNTARY DIGILIZATION BY CABLE OPERATORS .
DTH SUBS CROSS20 MN MARK
15
20
MN
DISPUTE OVER CONTENT . SETTLEMENT BTW DISH & STAR
DTH SUBS BREACH THE 2MNMARK IN A 2 PLAYER MKT.
DTH SUBSCRIBERBASE AT ~10 MN
10
15
RIBE
RS IN
M
DIGITIZATION TRIGGRED,CAS MADE MANDATORY IN SELECT PART OF METROS DISPUTE WITH SUN TV
5
SUBS
CR
LAUNCH OF DTH SERVICEBY DISH TV IN SELECTMARKETS
OVER CONTENT. SETTLED.
LAUNCH OFDTH SERVICE LAUNCH OF DTH
LAUNCH OF DTH SERVICE BY VIDEOCONLAUNCH BY
SUN DIRECT
0
BY TATASKYLAUNCH OF RELIANCE BIG TV
LAUNCH OF DTHSERVICE BY AIRTEL
7DISH Subscribers DTH Subscribers
INDUSTRY - KEY REGULATIONS
• Total Foreign investment limit of 49% (sub limit ceiling of 20% for FDI) • Uplink centre to be in India• Set-top boxes to be BIS compliant• License Fee at 10% of subscription revenues (favourable TDSAT order received on
28/05/10 I t t b k d t)
Licensing
28/05/10. Impact to be worked out) • Initial license validity of 10 years; renewable there after
Inter Connectd h d ll b d l bl
Inter Connect• Content providers have to provide content to all broadcasters; pricing flexible• Prohibits broadcasters from seeking guarantee for minimum number of subscribers
• Subscribers can be offered STBs on Rental / Hire purchase / Sale• Mechanism to be in place for handling customer complaints & grievances
Quality ofService
• Pricing information on content of the broadcaster• Max 50% of Non-CAS cable rates• A-la-carte offering to be allowed
Reference Inter-connect
DISH TV – MARKET LEADER IN DTH
9
BUSINESS MODEL
Direct-to-home distribution of TV channels up-linked from India by Broadcasters.
CPE installed at consumer’s house.
Initial inertia to pay for hardware equipment leading to up-front subsidy on STBs.
Negative Working Capital cycle – subscription revenue collected in advance.
Revenue from subscription and lease rentals.
Emerging revenue streams include, bandwidth charges, MOD, advertisement & lteleport.
Fixed content cost deals with most broadcasters; significant competitive advantage.advantage.
Growing subscriber base to bring in operating leverage into play. 10
KEY STRENGTHS
Brand • Strong Brand presence and Brand recall.
• Largest subscriber base amongst all six players; currently over 33%.• Carried and distributed by most third party dealers and distributors.Market Leadership
Largest Channel Offering
•250 channels & services and growing.• Fixed content cost deal with almost all big broadcasters.g
Pan-India presence through 1004 distributors & ~48,000 dealers across 6600 towns
Network managed by over 200 sales personnel. 8 Zonal and 19 Regional Offices.Selling & Distribution Network Netwo a aged by ove 00 sales pe so el. 8 o al a d 9 eg o al O ces.
~600 ‘Dish Shoppees’ to provide demo to prospective subscribers. (March ‘10)Network
Sufficient capacity to broadcast increasing number of channels –Advanced currently 10 KU band transponders.
• ‘DISH TRUHD’ with content tie-up with HD channel broadcasters already in place.
Infrastructure & Technology
SELECT KEY MANAGEMENT PERSONNEL
Subhash ChandraNon Executive Chairman
• Promoter – Essel Group of Companies. He has been the recipient of numerous honorary degrees, industry awards and civic honors.
• Involved in the day-to-day affairs of the company since January ’07, he has been instrumental in establishing Dish TV as India’s leading DTH
Jawahar Lal Goel
numerous honorary degrees, industry awards and civic honors.
he has been instrumental in establishing Dish TV as India s leading DTH company. He is also the President of the Indian Broadcasting Foundation.
Managing Director
Salil KapoorCOO
• An MBA from Delhi University, Salil has a work experience of more than 18 years and has worked with various global corporations including Microsoft and Samsung.
A qualified Chartered Accountant, Rajeev has been leading the finance department since January, ‘07.
Rajeev DalmiaCFO
DISH TV – NOW
13
CONSISTENT LEADERSHIP
75.7%
70%
80%
20
25 Dish market share on total subscriber baseDish TV – Increasing number of subscribers
50%
60%
15
20
18.43 20.67
42.4%
34.7% 33.4%30%
40%
10
% S
hare
3.6
11.1
2 74.7
6.4 6.9 10%
20%
5
2.7
0%0Dec-07 Dec-08 Dec-09 Mar-10
Total DTH HH Dish TV HH Dish TV Market Share
Players with large and stable subscriber base to emerge as winners in the long run…..Dish TV is well placed being the largest player in the DTH industry
Source: Dish TV
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KEY BUSINESS METRICSAverage Revenue Per User (ARPU)
ARPU under pressure due to increased competitioncompetition
Rational pricing to prevail as low pricing not sustainable over long term
Subscriber acquisition cost (SAC)
Focus on reducing subsidies – Change over to a model of charging for a bare box andg gun-bundling of content fees and set top box
15Source: Company ARPU = (Subscription revenue + activation charges) / Avg. subscribers during the period; SAC = Subsidy on STB+80% of
marketing exp.+Comm. to dealers
FINANCIALS
16
ENCOURAGING PERFORMANCEEBITDA Margin - Annual
7377
10848
700
900
1,100
R M
n.
FY 08-10 CAGR 62.0%8%
0.0%
20.0%FY 07 FY 08 FY 09 FY 10
EBITDA %
EBITDA Margin Annual
1909
4133
100
300
500
700 INR
-53%
-26%
-80.0%
-60.0%
-40.0%
-20.0%
FY 07 FY 08 FY 09 FY 10
12000
-99%-100.0%
Q3 FY08
Q4 FY08
Q1 FY09
Q2 FY09
Q3 FY09
Q4 FY09
Q1 FY10
Q2 FY10
Q3 FY 10
Q4 FY 10
EBITDA - QuarterlyOperating Revenues - Quarterly
6000
8000
10000
000
44 199 234127
354
-57% -39% -41% -50% -20% 2%6% 9% 5% 12% -20%
0%
20%
40%
0
250
500FY08 FY08 FY09 FY09 FY09 FY09 FY10 FY10 10 10
INR
Mn
0
2000
4000
-642-538
-667
-874
-390
100%
-80%
-60%
-40%
1000
-750
-500
-250
17
Q1 FY 10 Q2 FY10 Q3 FY10 Q4 FY10 FY10874 -100%-1000
LOWER CONTENT COST DRIVING MARGINS
18
SUMMARY FINANCIALS – QUARTERLY
Quarter ended Mar'09 Sep'09 Dec'09 Mar’10
Gross Operating Revenue 2,071 2,578 2786 3037
Expenditure 2,027 2,344 2659 2683
EBITDA 44 234 127 354
Add: Other Income 10 - - -
Less: Depreciation 644 730 779 846p
EBIT -590 -496 -651 -492
Less: Financial Exps 217 66 110 106
PBT -807 -562 -762 -598
Provision for Tax 2 0 0 0
PAT -809 -562 -762 -598
Operating metrics Mar'09 Sep'09 Dec'09 Mar’10
Subscribers Added (mn) 0.35 0.41 0.55 0.43
SAC ( Rs/sub) 2,505 2635 2477 2383
ARPU ( INR ) 131 139 135 138
Source: Dish TV Earnings release and published quarterly results; Amounts in INR mn unless other wise mentioned
WAY FORWARD
20
GROWTH WITH PROFITABILITY
Continuous focus on:
Augmenting
Sustained
product
innovation to
Customer care
Brand building
Expand
revenue
contribution
through
retain
subscribers and
expand
category
Technology
and
customer
base with
focus on
innovative value
added services
category
Distribution
leadership
21
THANK YOU
22
QUESTIONS
23
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