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Indian DTH firms need 10 mn subs to cash break even
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#1
Quote: Indian direct-to-home (DTH) operators have a long road to travel before they can start counting their profits.

Dish TV and Tata Sky, the two leading companies, expect to achieve a full cash flow break even once they achieve 10 million subscribers.

Dish TV hopes to reach that milestone by 2012 as it targets to add 2.5 million subscribers this fiscal, capitalising from a sports-heavy year that has the soccer and cricket World Cups.


In FY’10, Dish TV mopped up 1.8 million subscribers amid price war and stiff competition from players like Sun Direct, Airtel Digital TV and Tata Sky.

Tata Sky, which acquired 1.4 million new subscribers in FY’10, hopes to post a speedier growth this year. The entire DTH sector, in fact, expects 10-11 million subscriber addition on the back of sports events in the year.

“The break even will come only after a DTH operator crosses a subscriber base of 10 million despite low ARPUs (average revenue per user). At least, that looks like the case with Dish TV and Tata Sky,” says a media analyst who closely tracks the sector.

Airtel Digital TV believes the economic viability and profitability of the DTH industry rests on three pillars. “The speed of acquisition is important. The content cost, at 50 per cent of cable TV pricing, is also on the higher side. DTH companies also have a tax liability of over 35 per. If these things get corrected, we will have a profitable industry,” says Bharti Airtel director & CEO - DTH Ajai Puri.

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#2
Stiff competition among the top players will help bringing down the cost while good service is maintained this will induce more prospects as they will benefit of both good service at reasonable price. Economies of scale can help brings in more profit as compared to ARP.
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