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.
Airtel Digital TV has the fastest growth among all the DTH operators, pocketing 27 per cent of the incremental subscribers. “If you take out the southern region, we will be having an incremental share of 33 per cent,” says Puri.
The DTH sector is stung by low ARPUs, higher content cost (despite moving to a fixed rate model with broadcasters) and an advertising spend that is estimated at Rs 6 billion a year.
Videocon, however, believes it can be ebitda positive sooner than the older players. “We expect to be ebitda positive after reaching 4-5 million subscribers. The industry has got a lot more regularised and this is apparent even on the content side. The prices of set-top boxes (STBs) have fallen and customer acquisition is happening a lot more faster. As for us, we have the advantage of a backward integration model,” says Videocon d2h chief executive officer Anil Khera.
DTH companies are waiting for the Telecom Regulatory Authority of India (Trai) to come out with its recommendations on tariff by the month-end. They expect the sector regulator to fix a policy that will have similar pricing for DTH and cable for addressable digitisation.
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.
Airtel Digital TV has the fastest growth among all the DTH operators, pocketing 27 per cent of the incremental subscribers. “If you take out the southern region, we will be having an incremental share of 33 per cent,” says Puri.
The DTH sector is stung by low ARPUs, higher content cost (despite moving to a fixed rate model with broadcasters) and an advertising spend that is estimated at Rs 6 billion a year.
Videocon, however, believes it can be ebitda positive sooner than the older players. “We expect to be ebitda positive after reaching 4-5 million subscribers. The industry has got a lot more regularised and this is apparent even on the content side. The prices of set-top boxes (STBs) have fallen and customer acquisition is happening a lot more faster. As for us, we have the advantage of a backward integration model,” says Videocon d2h chief executive officer Anil Khera.
DTH companies are waiting for the Telecom Regulatory Authority of India (Trai) to come out with its recommendations on tariff by the month-end. They expect the sector regulator to fix a policy that will have similar pricing for DTH and cable for addressable digitisation.