FIPB nod opens up opportunity to raise funds: Dish TV

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FIPB nod opens up opportunity to raise funds: Dish TV

Salil Kapoor, chief operation officer of Dish TV tells CNBC-TV18 that they have no yet decided on how much money to raise of when to raise it.

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Excerpts from Markets Midday on CNBC-TV18 Watch the full show » ALSO READ See latest News about Dish TV India See previous management interviews See what other Experts & Brokerages are saying about Dish TV India Dish TV India BSE | NSE 29/05/12 Are Mutual Funds betting on Dish TV India?

The Foreign Investor Promotion Board recently gave Dish TV the nod to raise USD 200 million, however, Salil Kapoor, chief operation officer, tells CNBC-TV18 that they have no yet decided on how much money to raise of when to raise it. "We have just taken the approval to position ourselves for any opportunity which comes our way," he explained.

Apart from the FIPB approval, the company had two other positives coming in - a recent price increase across the nation and a stay order in the case of 30% entertainment tax in Tamil Nadu.

"We hiked prices by Rs 10 in north India and by Rs 15 in the four states in the south. But the revenue upside will accrue over a period of time as and when the service come up for renewal," said Kapoor.

Below is an edited transcript of his interview with Latha Venkatesh and Reema Tendulkar. Also watch the accompanying video.

Q: Could you tell us what the relief is on account of the Madras High Court staying that 30% entertainment tax? What is the update on that because as of now it's only a stay and assuming hypothetically it stands at about 30%, how much would Dish TV get hurt by?

A: We had filed writ petition that such a tax of about 30% on for the DTH is discriminatory and is in violation to article 14 of Constitution, so we got a stay. But as far as this case is concerned, cannot comment more on this because the matter is sub-judice.

Q: I am asking for the implication on the P&L if indeed it went your way?

A: We have a small base as far as Tamil Nadu is concerned, so if they will raise it will not have great impact.

Q: We understand that there have been small moves by DTH operators to increase prices. Is that true?

A: I am not aware about others but as far as we are concerned yes, there has been a price increase in our lowest pack. As far as the north is concerned, it's by about Rs 10 and as Rs 15 in all the four south States. Also on the acquisition there has been some price increase. But this was already planned in advance, after the festival season we wanted to take the prices slightly up.

Q: Can we see further price increases and on the back of the price increases of about Rs 10 odd which you have indicated and taken what will be the revenue upside?

A: The revenue upside is yet to be seen because it will accrue over a period of time as and when the service come up for renewal. The overall price increase a far as the pack is price is concerned is close to 3% of our overall base.

As far as further price increases are concerned, I cannot comment anything as of now because we have recently done one and we have to see how the market absorbs it and how the market grows and reacts to this current price increase and then we will see if there is anything required in future or not.

Q: The big news that propped up your stock was also the fact that you have now got FIPB approval to raise USD 200 million. Will that come pretty soon?

A: We have already said what we have to say on FIPB approval, nothing more to say on that. We have taken this approval only to position ourselves for any advance plans in case we need any money. The great opportunity is digitization, but no plans as of now because its just approval that we have taken to position ourselves for that money in case it is required. As of now, there is no decision on how much to raise and at what point to raise.

Q: I have with me a brokerage report from Edelweiss which says that your debt equity is now stretched. In fact, this brokerage calculates it at 29 times. That would mean that you would need equity sooner rather than later, wouldn't you?

A: I haven't seen that brokerage report, so I cannot comment on that.

Q: But what is your debt now?

A: I am not aware of the exact amount of debt as of now and the debt equity ratio as of now; there have been some changes in the recent past. But coming back to FIPB thing, there are no plans confirmed as of now of what we are going to raise, how much we are going to raise. We have just taken the approval to position ourselves for any opportunity which comes our way.