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Dish TV could build on first-mover advantage
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#1
With the entry of big players such as Bharti Airtel and Reliance BIG TV, besides Tata Sky and Dish TV India, the direct-to-home (DTH) business has caught the fancy of subscribers and investors alike.

Dish TV India, which is the only listed company in the DTH segment, had at the end of December last year close to 6.4 million subscribers. This indicates that DTH is catching on and some estimates indicate that the DTH market would grow more than 50% over the next three years. Investors have not discounted this fact.

For the past 18 months, the company’s stock has beaten the Sensex by a good margin. Investors have seen returns on the stock of over 150% and 55% in the past 18-month period, when the Sensex returns were close to 90% and 44% in the same period. The company recently unveiled its third-quarterly results marked by a widening of its losses.

In the third quarter, its losses were higher at Rs 76.2 crore from Rs 56.1 crore in the same quarter last year due to an expenditure of Rs 12 crore it had to incur on marketing. In fact, the cost of sales, distribution and marketing costs brought down its EBIDTA during the quarter.

The DTH industry now has become a battle ground, where big players are battling it out to gain a major pie of the subscriber base. In this battle, the first and early entrant is up against stiff competition in terms of getting and retaining subscribers from new and formidable players such as Tata Sky, Bharti Airtel and Reliance BIG. And this competition is in the Rs 2,500-subscription bracket rather than the sub-Rs 100-subscription bracket.

Dish TV has felt the impact of this competition in its market share, which fell from 38% in the second quarter this year to 35% in the third quarter. In fact, considering the stiff competition, the company had the same subscriber acquisition costs and ARPU of around Rs 2,500 and Rs 139 it had in the second quarter of this year.

Initiatives such as movie-on-demand, booking movie tickets along with adding new channels packages are being designed to attract subscribers. Dish TV India was the first player to enter the DTH market and having a wide array of channels from its Zee Group. Hence, it would be the first player to become cash-positive.

However, it would take around three to five years, considering the investment such as set-top boxes involved in the business. The company is now raising money. It has already mobilised close to $100 million through a GDR offering.

The third tranche of its rights issue of Rs 1,200 is due in June this year.

Source: The Economic Times
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#2
Competition is growing and will stiffen competing companies to give what is best for customers.
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