Will strive to get ARPU of Rs 175 in FY14: Dish TV

The direct-to-home service provider Dish TV hopes to increase its average revenue per user to Rs 175 going forward from Rs 157 recorded in January-March, Jawahar Goel, MD, Dish TV told CNBC-TV18 today.

“Going forward our board has passed the budget for Rs 175 ARPU, which is not the guidance for the market, but its board’s wish list and direction to the management, and we will strive to get it,” Goel said.

Along with ARPU, Dish TV will also strive to improve its operating margins. The company’s operating margin took beating in the fourth quarter and fell to 21.6 percent from 27.4 percent.

Goel said predated settlement of around Rs 40-50 crore in fourth quarter impacted the margins. He however expects margins to improve from 21 percent level going forward on the back of price hike taken in April.

Dish TV reduced its losses to Rs 43.62 crore in fourth quarter from Rs 49.2 crore, a year ago. Revenues of the company shot up by 9 percent to Rs 571.09 crore compared to Rs 525.8 crore in the same quarter last year.

Below is the verbatim transcript of Goel’s interview

Q: Can you start off by telling us why your margins have been lower at about 21.6 percent? What kind of margin pressures you have faced this time around?

A: Last quarter we informed about a pending content agreement. We had a predated settlement, so there is an impact of around Rs 40-50 crore in this quarter. That is the only pressure on the margin.

Q: Do you expect your margins to continue to remain around this 21 percent level for the calendar year or do you think you could recover from this?

A: Our EBITDA for the year is 27 percent and we will try to improve going forward. Because of digitalisation we had seen some higher win back from our existing base. The churn was 0.8 percent. We had not seen this kind of a churn for ages. Two-three years, we had not been able to touch this kind of a churn. The metrics is good and also in the month of April we had taken a price hike on our package pricing. I think that going forward we are in pretty normal situation than this quarter under discussion, because we had the abnormal expenditure of the content cost.

Q: Your Average Revenue Per User (ARPU) has fallen Quarter-on-Quarter to Rs 157 vis-à-vis Rs 160. Can you just elaborate in terms of what sort of pressures are you facing in terms of the ARPU? Is there a lot of cost pressure coming in now that digitisation is taking a higher pace and what sort of ARPUs can we expect going forward for Dish TV?

A: Our ARPU is flat. In the fourth quarter we have two less days because of February, otherwise the ARPU stands at Rs 160 on daily basis. Going forward our board has passed the budget for Rs 175 ARPU, which is not the guidance for the market, but it’s board’s wish list and direction to the management, and we will strive to get it.

Q: What kind of subscriber addition have you seen this quarter and what could the run rate look like in the quarters to come?

A: The industry is doing around 2-2.5 million per quarter. Now almost all DTH is working to have QWERTY subscriber than the mass subscriber base. The Dish TV is also looking at that parameter, that we do not want to have mass numbers, especially when some of the content deals are on Cost Per Subscriber (CPS) basis. So there is no point in acquiring more customers and then churning out. So I think the company has become more focused on the ARPU and EBITDA than acquiring more and more subscriber unduly.

Q: What does the debt position for the company look like at this point? I do not have your interest costs with me, but if you could just take us through what the trajectory in terms of the interest costs as well as the debt reduction plans would be for Dish TV?

A: We have a reduction in the interest cost of almost 30-35 percent. This year we are going to repay the loan of around Rs 750 crore out of our internal accrual and the cash in hand.