Don't worry about Dish TV subscriber add but ARPUs look weak

Moneycontrol Bureau

Investors of Dish TV seem to be not very bothered about its weak subscriber additions in December quarter. Shares of the direct-to-home (DTH) company rose 6 percent intraday on Thursday. Most analysts are also bullish on the stock stating that weak net additions in Q3 was due to change in management and lack of availability of competing product.

Dish TV's net subscription additions of 0.32 million were the lowest in six quarters whereas DTH/cable competitors saw acceleration in subscriber additions in third quarter. However, the management continues to guide 1.5 million net subcription additions for FY16.

Average revenue per user (ARPU) in Q3 was at Rs 172 from Rs 171 on a sequential basis. During the period, subscription revenue was up 4 percent at Rs 711.1 crore against Rs 682 crore (QoQ).According to JP Morgan, a large part of new addition are in the low ARPU segments in tier 3/4 markets, which may put pressure on ARPU levels in the near term. The company although noted that the margins on these low ARPU products are not inferior to overall business given lower content cost payouts. Further, increasing share of HD should help offset the impact on overall reported ARPU, feels JP Morgan.JP Morgan has an overweight rating with a target price of Rs 117 per share. It says that Dish TV has shown strong operating leverage on programming costs and is likely to sustain over the next few quarters. "The company has now tweaked package offerings which has seen good response and it is gaining back the market share. The company is confident in achieving net adds of 0.5 million in Q4 on new product launch and upcoming cricket season. This should help it reach its full year target of 1.5 million," it adds.