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Feb 13, 2012, 01.34 PM IST | Source: CNBC-TV18

Phase 1 and 2 digitization progressing well: Hathway Cable

It has already achieved digitalization of 2 million homes on a voluntary basis, which is expected to start monetising once digitalization happens, K Jayaraman, chief executive officer, Hathway Cable told CNBC-TV18.

K Jayaraman, CEO, Hathway Cable

Television cable service provider, Hathway Cable’s standalone EBITDA improved by Rs 2 crore sequentially. For the third quarter, its EBITDA stood at Rs 23 crore against Rs 21 crore posted earlier. However, its standalone revenue on a year-on- year basis was Rs 129 crore as compared to Rs 131 crore posted earlier.

"We have already achieved digitalization of 2 million homes on a voluntary basis , it is expected to start monetising once digitalization happens," K Jayaraman, chief executive officer, Hathway Cable told CNBC-TV18.

"For the nine month period, our incremental deployment for setup box has been almost for 450,000. Our broadband cable business has also been showing substantial growth," he added.

Hathway is well prepared for first two phases digitalization starting from July 1, 2012.

Below is the edited transcript of Jayaraman’s interview with Udayan Mukherjee and Mitali Mukherjee of CNBC-TV18. Also watch the accompanying video.

Q: What expectations you have now in terms of what the revenues could look like for the full year and on what kind of EBITDA margins?

A: For this quarter on a standalone basis, our revenue was Rs 129 crore and EBITDA was Rs 23 crore. Sequentially, the revenue was Rs 131 crore and EBITDA was Rs 21 crore. So, compared to sequential previous quarter we are Rs 2 crore sub on EBITDA.

On a consolidated basis, we report EBITDA based on our economic interest and as compared to Q2 our economic interest consolidated EBITDA was Rs 63 crore. It has gone up to Rs 97 crore. On a consolidated basis, based on our economic interest, the EBITDA which was Rs 8 crore per month for the previous quarter (Q2) is almost about Rs 11 crore for the current quarter.

As regards digitalization, our progress has been quite good, we have already achieved on a voluntary basis digitalization of 2 million homes. It will start monetizing once digitalization happens. For the nine month period rendered the December 2011, our incremental deployment for setup box has been almost for 450,000. Our broadband cable business has also been showing substantial growth.

It has been 16% growth in revenue over last year same period and a 36% growth in EBITDA as compared to the previous period. Total revenue generating unit - the total subscribers on which we generate revenue, which includes cable and broadband is 2.3 million. That makes us almost 50% higher than the nearing competition. We are well set for the digitalization phase one and phase two which will kick off from July 1st 2012 and there on till 2014.

Q: Your interest costs have gone up in the current quarter. With reference to that what kind of capex you have going forward and whether it is indeed and option for you to look at a strategic investor who comes in to fund part of your capex?

A: Currently, our debt equity is 0.3 times. Our total debt stands at about Rs 265 crore and Rs 245 crore of debt and about Rs 20-25 crore of lease. That is about 0.3 times as compared to our net worth. We have a cash on hand of about Rs 70 crore. For phase one we don’t think that we would be looking for any investor.

Phase one is Mumbai, Delhi and partly Kolkata through our subsidiary, we will be funding it out of the cash on hand and incremental vendor credit and/or buyers credit. At this point, we don’t see any requirement of equity funds either from financial investor or strategic. For phase two already deployment of setup boxes for phase two cities like Hyderabad, Gujarat, Bangalore is well on way as far as Hathway is concerned. At this point we really don’t see the necessity for equity investor in whichever form.

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