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DTH, cable distribution space uncomfortable for investors: Angel Broking
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#1
Are you upbeat on Hathway Cable distribution business?

This business has far more headwinds than most of the investors can reckon at this point in time because the comparison that is being made with the cable distribution or the DTH sector these days is with telecom 10 years back. But at that time, you had lesser number of competitors. You had incumbents who actually managed to make money a couple of years back and only Bharti has managed to make that money.

But if you look at a DTH space or the cable distribution space, you have a number of strong players who have got into this all at the same time and it is very difficult to imagine how all of them would start making money. If one way to make a call on this sector, a DTH would be far better play as compared to cable distribution because there is a huge technology barrier also that these companies need to cross.

Thus the kind of business model, the franchise-led business model all about acquiring MSOs and the kind of competition that can ensue between at least the two listed players that you have - Den and Hathway - can actually take a toll going forward.

So from an investors point of view, there is a lot of clarity that is still not there in these business models and the kind of valuations that these are being offered at. I do not think for investors like us it offers a lot of comfort. So we have stayed away from both of them.

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#2
Investors require calrity in any form or type of investment they make because their basic aim is to earn profit, DTH and cable do have a speculated profit earning capacity but the competition between DTH and cable is on the rise and hence until its clarity from both the industry is pointed out as to who is doing good in market investors will keep at standby till then.
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