May not meet FY12 subscriber guidance: Dish TV

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May not meet FY12 subscriber guidance: Dish TV

In an interview to CNBC-TV18, RC Venkateish, chief executive officer of Dish TV says, the company may not meet its FY12 guidance of 3-3.5 million subscribers. “The guidance of 3-3.5 million will probably not be hit. We will probably close in the region of about 2.6-2.7 million,” he adds.

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Excerpts from Closing Bell 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 30/05/12 Are Mutual Funds betting on Dish TV India?

Dish TV has declared its third quarter results. The company's net loss stands at Rs 43 crore versus loss of Rs 49 crore on quarter-on-quarter (QoQ) basis. It net sales are at Rs 490 crore versus Rs 482 crore, (QoQ).

In an interview to CNBC-TV18, RC Venkateish, chief executive officer of Dish TV says, the company may not meet its FY12 guidance of 3-3.5 million subscribers. "The guidance of 3-3.5 million will probably not be hit. We will probably close in the region of about 2.6-2.7 million," he adds.

Below is the edited transcript of his interview with CNBC-TV18's Udayan Mukherjee and Sonia Shenoy. Also watch the accompanying video.

Q:  Your EBITDA level, QoQ, has flattened out in the current quarter. Is there any reason? Did it have to do with the currency or did you experience some pressures?

A: There is some impact due to the forex fluctuation. That's impacted by about Rs 3 crore. Also, the rental revenue, which we booked as a part of the overall subscription revenue, is down by about Rs 9 crore. That's a function of some of the older rental being replaced by the newer rentals because the older rentals were at a higher value. That's impacted by about Rs 8-9 crore.

We have also had some increase in content cost because have renewed deals with two broadcasters-Sony and Neo Sports. In the very first quarter, the renewal will have a higher impact and through the year that impact will get mitigated as the top-line grows.

Q: Do you maintain your guidance of 3-3.5 million subscribers for FY12 or do think you could see some pressure over there?

A: We had maintained the guidance for the first two quarters. In the last quarter and also, to the some extent, in the quarter before that, we had a very substantial volatility in the rupee. It went from 44.85 to 53. That obviously had a substantial impact on our subscriber acquisition cost because the cost of the hardware went up quite a bit. So, in November, we instituted a very steep price increase for the entry level for the Dish-TV subscription. We went up from Rs 1,190 to Rs 1,590, almost a 35% increase to mitigate the impact of the depreciation of the rupee.

Now, after we did that, the rest of the industry also followed. That obviously had a substantial impact in the short-term. We had a very good month in October. In November, post the price increase, obviously we took a dip. December was also low.

Now price increase is showing signs of getting absorbed. The guidance of 3-3.5 million will probably not be hit. We will probably close in the region of about 2.6-2.7 million. It was necessary for us to do that, otherwise the subscriber acquisition cost (SAC) would have short up. That is not something we wanted to have.

Q: The ARPU for the quarter has been quite flat at Rs 152. Do you expect to see a significant increase in the next quarter?

A: There are two types of price hikes. One, the acquisition price of the consumer, which also covers the hardware cost, a portion of that is really built into the subscription revenue, the activation fee. That has not changed because what we have actually done is increase the price of the box, which is the acquisition price, so most of that would be to offset the hardware cost.

The other price increase that we actually took in the third week of November was a price increase on our subscription package at the entry level, which is the family pack. We moved from Rs 165-175. Now, this price increase is only effective, when a person comes back to recharge. Therefore, it starts reflecting slowly in the metric. We would expect that price increase impact to flow through in the Q4, since that's a slow moving item.

Q: When do you think you can post profits? How many more quarters before that happens?

A: If you negate the impact of the forex fluctuation, we are pretty much there. When we closed the Q3, the rupee was close to about 53.26. Today, it was around 50.30. So, it looks certainly like the worst is over as far as the rupee depreciation is concerned. If that element wasn't there, we would be pretty much there. Unless the rupee depreciates beyond 53 for this quarter, we should be PAT positive.