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No plans to cut price of DTH service, say players - Sathish - 09-27-2010

Despite fierce competition among direct to home (DTH) companies, consumers are unlikely to see any further reduction in prices of new connections. Reducing costs would mean incurring more costs for the DTH players, who are yet to achieve a break-even.

Tata Sky recently came out with new pricing of Rs 999, under which it offers only the equipment (set-top-box). The consumer is now free to choose the content package. “It is an unconditional offer, with no strings attached,” Mr Vikram Mehra, CMO, Tata Sky said.

Rivals Dish TV, Sun Direct, Airtel Digital and Reliance Big TV claimed they were already in the same price band of around Rs 900 if the cost of hardware is considered on a standalone basis. As they bundle content with new connection, the package costs range between Rs 1,399 and Rs 1,599 for various players. “We don't have any plans to bring down our prices,” said Mr Sanjay Behl, CEO of Reliance Big TV. “In fact, we command a premium of around 20 per cent in the market place, which we want to maintain,” Mr Behl added.

Instead of focussing on costs, Reliance plans to invest in strengthening its product offering. “We plan to add 12 more channels in next two weeks,” Mr Behl said. Reliance currently offers 254 channels.

Dish TV, the market leader with over 8 million subscribers, has no plans to repackage its costs in response to Tata Sky's move. “We have no confirmed plans as of now,” said Mr Salil Kapur, COO, Dish TV.

Acquisition cost

Aided by growing volumes and reducing hardware costs, Dish TV has seen a gradual decline in its subscriber acquisition costs (SAC) in the past few quarters. Dish TV's SAC currently stands at Rs 2,147 in the latest quarter, against Rs 2,487 a year ago.

“Any festival offers that we plan would be worked out keeping in mind our subscriber acquisition costs. We don't want to incur any extra costs,” Mr Kapur said.

Industry analysts said any further subsidisation of customer acquisition would delay the profitability of these companies. “It (subsidising) may spoil the consumer habit and may not be good for the industry in the long-term,” an analyst said.

“We will see how the market reacts and then decide,” said Mr Tony D'Silva, CEO of Sun Direct. However, the company does not have any plans to bring down the prices, he added.

Stating that there was no need for a price war, Mr Sugato Banerji, CMO, Airtel Digital, said the company might come out with offers for the forthcoming festive season to expand its market share.

Source: The Hindu Business Line

RE: No plans to cut price of DTH service, say players - Mr.AB - 09-27-2010

Nice info Sathish, So despite the TP sharing by Sun and Big TV, we cant expect any slash in monthly rent in both DTH's. I think Big TV is interested in Urban, and City Customers, and they will add more channels to their platform. They might increase their price soon as well.... Smile