See strong Q4 on back of Cricket World Cup: Dish TV

A: We had all around growth through the quarter and the subscription revenue line growth was driven both by an increase in the overall subscriber uptick as well as the Average Revenue Per Unit (ARPUs). The ARPUs grew from 172 to 177 and we added about 416,000 subscribers during the quarter and within this we had a very strong growth in the high definition (HD) segment. Today the incremental additions of HD is close to about 17 percent of our total incremental ads which is up from about 10-11 percent two or three quarters ago. So, increased uptake of HD as well as increase in overall subscription numbers as well as increase in ARPU is what has driven the growth and subscription revenue.

Sonia: Do you expect this growth to continue in Q4 as well and what could the subscriber addition look like in quarter four?

A: Absolutely, we have had strong momentum continuing in January as well and Q4 we expect to be a particularly good quarter because of the upcoming cricket World Cup which starts from February 15 and goes through to March 31 and overall we have multi-prong strategy for growth. One is of course the HD, second is the normal product and of course our regional product Zing is doing extremely well. We have just yesterday launched it in Tamil Nadu as well, with that taking the coverage to about seven language states.

So, overall we see this fairly strong and sustained momentum definitely in this quarter and as well the following quarter because we also have IPL. So we have a very cricket heavy season in the next six months, so we expect this to continue. And after that we expect the momentum to continue through the follow up of digitisation in phase three and four.

Sonia: So can we expect the company to turn into the black in Q4 itself. You have been narrowing your losses quite a bit and now it is just about Rs 3 crore for the quarter, the loss that is. When will the company turn profitable?A: Yes, if you look at the numbers and do the maths we are pretty much at the inflection point because it was more or less a break even quarter and we have been steadily improving our metrics plus the margins have improved. Our EBITDA margin for the quarter was 28.8 percent. So we definitely expect this will translate into better performance in the bottomline plus a couple of external triggers also that we are expecting. One is we will probably get a clarification on the renewal license fee regime and as you know Telecom Regulatory Authority of India (TRAI) has recommended the license fee for the Direct-to-Home (DTH) sector be brought down from ten percent to eight percent adjusted which means effective rate of about 7.7.So there is about 230 bps sitting on the license fee and plus we do expect even before GST hopefully there might be some relief in terms of part of the entertainment tax getting subsumed in the service tax or vice versa. Even if that doesn’t happen whenever GST happens there is another 350-400 bps of margin improvement available for the stock.Sonia: So are you saying that in the first half of FY16 itself the margins could go up closer to that 27-28 percent mark?A: As I said DTH licence is due for renewal because the original license expired about an year and three months back and we are currently running on extension. The new policy is slated to be announced any time. TRAI has already made a recommendation that the license fee be brought down from 10 percent GR to eight percent AGR which effectively translates to about 230 basis point improvement. So, that has to be announced at some point in time. So, I can’t put a specific date to it but it is pretty much on the anvil and then of course the whole issue of GST is also there. Whenever GST happens we will automatically have an improvement in that metric as well.