Dish TV revenue to dip 0.25% more with TN govt's e-tax move

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Dish TV revenue to dip 0.25% more with TN govt's e-tax move

The Tamil Nadu government imposed 30% entertainment tax on DTH operators. Jawahar Goel, managing director of Dish TV said that with the E-Tax imposed by the Tamil Nadu government, the revenues will be impacted a quarter percent more, he told CNBC-TV18 in an interview.

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The Tamil Nadu government imposed 30% entertainment tax (e-tax) on direct to home (DTH) operators. Jawahar Goel, managing director of Dish TV said that their revenues are impacted almost 7% because of the entertainment tax across the country. "With the E-Tax imposed by the Tamil Nadu government, the revenues will be impacted a quarter percent more," he told CNBC-TV18 in an interview.

Dish TV's last quarter EBITDA was in the range of 24-26%. Goel further indicated that the company will improve their EBITDA by 1.5-2% every quarter.

Here is the edited transcript of his interview. Also watch the accompanying video.

Q: What do you think about the 30% e-tax? What kind of material impact would it have on Dish TV?

A: Most of the state governments are preparing themselves for the GST role out for the next financial year. It will probably be June 12, when the GST will be rolled out. The state governments have levied the tax to get extra money from the central government.

DTH is not the only category for e-tax. There are several other categories in the business. The state governments keep introducing new taxes. The Tamil Nadu government has submitted a bill in the assembly to levy e-tax only on DTH.

The movie theatres and cable operators have been kept out of it. The association of DTH operators are keeping an eye on the development. At the appropriate time, they will agitate this issue in the court of law.

Q: Would this move impact your EBITDA? What are the options for Dish TV to either pass on the tax impact to your consumers or to not push that much for subscription?

A: Tamil Nadu is a peculiar market. Politically, the environment is different. In the previous regime, a single DTH ruled that market. Now, that single operator has become one of the players. The lead operator in that state has come down to 35% market share on a month-on-month basis.

So far, our subscriber base is very low. There is an impact of almost 7% on our revenue on entertainment tax across the country. With the e-tax imposed by the Tamil Nadu government, the revenues will be impacted a quarter percent more.

Dish TV's last quarter EBITDA was in the range of 24-26%. Going forward, we will improve our EBITDA to 1.5-2% every quarter.

Q: Since Tamil Nadu is not such a big market, it's not a worry. But, is there a fear of E-tax getting hiked in other markets as well?

A: Among all the markets, almost 17-19 states have already introduced the e-tax. The Rajasthan government, which is under the leadership of Sonia Gandhi, has eliminated the e-tax. I hope the other state chief government led by UPA to follow the suit.

Q: Won't you be passing on this tax to your customers at this point in time? When does this tax come into play? Is it from the immediate next quarter?

A: We would have to wait until the legislation is notified. Only when the assembly passes it, the government will sign and notify it. And then, it will become effective. We don't know how this legislation will take place. It may get delayed for two-three months or in a couple of weeks.

Q: How is subscription moving along? Reports show that the subscriber division for the second quarter has come off quite a bit. Would you have to relook your full year guidance of about Rs 3-3.5 million?

A: Last quarter has not been good for any of the consumer items like car, television and the DTH. If we compare the DTH category from last year, it is a slow down by about a 7-10% in the new customer acquisition. Last financial year during this period was good due to a lot of sports events, but this quarter is almost 8% lower than the last financial year. In this category, Q1 and Q2 were not good. The Q3 can do almost 30-40% of the full year turnover.

Q: Would you hold your guidance at this point? Is it more likely that you will do something south of 3 million?

A: We are not revising it. We will wait to see how the festival season pans out.