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Merger synergies drive Dish TV’s Q3 FY19 EBIDTA margins to a high 34.1%

Dish TV India Limited has reported third quarter fiscal 2019 consolidated subscription revenues of Rs 14,126 million. There were 142,000 net subscriber additions during the quarter, closing net subscriber base of 23.6 million. 

Operating revenues for Q3 FY2019 stood at Rs 15,174 million. EBITDA for the quarter stood at Rs 5,176 million, up 4.0 per cent YoY. Merger synergies drove EBITDA margins to an almost historical high of 34.1 per cent, up 330 bps YoY. 

Dish TV reported profit after tax (PAT) of Rs 1,527 million in this quarter, as against net loss of Rs 1,683 million in FY2018. 

The third quarter kept the television industry on its heels with the TRAI Tariff Order approaching its erstwhile deadline and regular business activity picking up speed during the festival period. 

Dish TV India was the first in the industry to partially and voluntarily roll-out the provisions of the Tariff Order by offering a-la-carte channels to its subscribers at affordable prices. 

However, with the implementation getting pushed back by a month to February 1, 2019, subscription recharge was hit by ambiguity and indecisiveness on the part of the subscribers. 

Jawahar Goel, CMD, Dish TV India Limited, commented, “I am glad that all opposition to the Tariff Order has now finally been put to rest. We continue to strongly believe that the Regulation should minimise discriminatory pricing by ensuring a level playing field between cable and DTH platforms and should be beneficial for the entire industry thus leading to higher earnings going forward.” 

Anil Dua, Group CEO, Dish TV India, added here, “The Interconnection Regulations and Tariff Order, as notified by TRAI, will lay down new norms for the television industry ushering in an era of growth, transparency and non-discrimination.” 

At the same time, he admitted, “A delay in the implementation of the Tariff Order, however, before the erstwhile deadline, triggered a hesitation amongst subscribers leading to a noticeable fall in recharges during the month of December. The trend is expected to reverse in February, as the Tariff order gets implemented, and should become normal by the end of this quarter.” 

“Sustainability review of long term packs had some impact on activations in select markets. That said, barring the fluctuations in December, the business delivered in line with expectations in the festival months of October and November,” Dua further said. 

Commenting on the recently presented Interim Budget 2019, Goel said, “The Interim Budget 2019 gave an approximate Rs 230 billion spending stimulus to the consumption class, comprising of small business owners, salaried employees and the middle class by way of tax exemptions. In addition, increased disposable income in the hands of farmers by way of PM Kissan Samman Nidhi scheme introduced in the Budget should be a great boon for consumer sector companies like Dish TV. Further, the 150,000 homes built under the PM Affordable Housing Scheme and every new house proposed to be built thereunder should be a potential pay-TV customer in the near future.” 

Integration Progress 

A little over 10 months down the line from the merger, most of the merger related integration at Dish TV India is nearing completion. 

Information Technology integration moved to the next level during the quarter with the company launching a common CRM (customer relationship management) service for both Dish TV and D2h brands. 

Integrating the User Interface (UI) of both brands was a challenge that the Company decided to meet head on. 

‘Project Phoenix’ was launched immediately after merger and it was in December finally that the teams could make a break-through by seamlessly integrating the UI of both brands but by letting the CRMs of both brands work in their individual capacity. This was essential as building an altogether new CRM was an expensive and time consuming task. The integrated yet differentiated UI is expected to help achieve greater efficiencies in the areas of field service and customer satisfaction going forward. 

Further, Dish TV India’s focus on continuous statistical based improvement and quick response to opportunities and changes in business made it target the CMMI, Maturity Level 5 certification. Capability Maturity Model Integration (CMMI), Level 5, was awarded to Dish TV India during the quarter making it the only Media and Entertainment Organisation in the world to be certified with Maturity Level 5. 

Integration of headend infrastructure was planned to enhance the customer TV viewing experience and serve satellite operations for both its brands. During the quarter, Dish TV India upgraded and expanded its entire DTH platform to the AVP 4000 video processing platform. The award-winning compression technology will now enable the company to adapt to both traditional broadcast and multiscreen service delivery from a single platform. The upgradation shall also enable the Company to provide the highest video quality with significantly enhanced bandwidth cost efficiencies. 

Innovating and integrating on the marketing front, Dish TV became the first in the industry to use Augmented Reality for mobile marketing and advertising. The campaign leveraged Augmented Reality/ Virtual Reality to connect the two brands with the masses enabling brand recall and innovation through mobile marketing. 

During the quarter, significant cost synergies were realised in transponder costs, call-centre expenses and programming costs. Overall cost of goods and services (COGS) was down 4.2 per cent YoY. Finance cost was lower by 9.3 per cent YoY as debt repayments continued as per schedule. The company aims to be debt free in two years. 

Investment in brand building and marketing for both Dish TV and d2h brands continued, with both brands launching new brand campaigns for the festival season. Marketing expenses thus remained high during the quarter. 

Anil Dua is optimistic about exiting FY19 with a high single digit growth in EBITDA, considering back-to-back cricketing action during the fourth quarter and further realisation of synergies.

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