Rationalisation in taxes will push digitization: Dish TV

RC Venkatesh, chief executive officer, Dish TV, says that the company has been delivering a positive free cash flow for the last several quarters. Other players will have the opportunity to raise capital through this move.

Below is the edited transcript of his interview to CNBC-TV18.

Q: How do you see this development? Most of the DTH players have a decent balance sheet at this point. The move is a bit more beneficial for MSOs. What are your thoughts to what’s being done?

A: Irrespective of MSOs or the DTH operators, this move will allow more flexibility to the players to raise the requisite capital when required which is a positive move. I hope the government takes up steps to rationalize taxation for DTH players who are under the burden of paying almost 33-34% in fees and taxes. If the government looks at rationalizing in that area it will give fillip to digitization.

Q: Are you close to speaking or tying up with someone at all? Do you expect the industry itself to see some foreign interest quickly?

A: Currently, we are not looking for additional capital; we have a good balance sheet and delivering positive free cash flow for last several quarters. There are other players who will have some opportunity to raise capital, first the regulation allowing higher investment and second, the money needs to find its way to places where it goes and get good returns.

So even within the existing cap of 49%, I don't think that everybody is maxed out in attracting capital. There is room for many players to taken it up to the 49% limit for both FDI and FII and those limits have not been breached in several companies.

Q: You don't see any money at all coming afresh because of this at least not say in this fiscal?

A: Money will flow selectively, but it depends on the assessment of the investor and the investing company. Money will flow if returns are made in specific entity, but it will be more corporate specific. As far as India and media sector is concerned, there is fair amount of interest already generated and many investors are invested in this sector. So we see the trend to continue.

Q: With this opening up some of the bigger players might want to acquire a couple of players and we could see consolidation in the MSO place itself. That could pose as a competition to the DTH industry?

A: I don't know how by increasing the FDI limit it will impact consolidation within the country. External player coming in and taking position has made it attractive but this will an individual specific call. You cannot paint everything with the same brush.

Q: How has been the progress on digitization so far?

A: We are well prepared and we hope that it will happen.

Q: With October 31 there is not much time to change policy. Do you think that stays?

A: Last time the deadline was 31st July and we got two weeks prior announcement, there have been delays.

Q: What kind of subscriber additions can you guesstimate for the current year? How would it compare to last year? What about the average revenues that you are expecting per user? How might it shape up vis-à-vis last year?

A: We have already given guidance and we are not changing those guidance. We have indicated that if digitization doesn't go as per planned and the subscriber additions are within 0.5 million and if it does grow then we are looking at 3-3.5.