DishTV Investor Presentation Sept 092048073719
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Transcript of DishTV Investor Presentation Sept 092048073719
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DISH TV INDIA LIMITEDCorporate Presentation
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DTH Industry Overview
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4
Pay-TV market on a growth trajectory
India TV industry and DTH overview
0% 0 % 1%3%
9%
13 %17%
20%2 2%
2 4%
55%59%
61%64 % 64% 6 4%
64% 64% 6 3% 63 %
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
2004 2005 2006 2007 2008 2009p 201 0p 201 1p 2012p 2013p
% D TH HH to TV H H % C a ble HH to TV H HSource: MPA report 2009
Source: MPA report 2009
Increasing TV Penetration
DTH gaining foothold in TV HHs Share in incremental Pay TV HH added
Source: MPA report 2009
India is a large TV market - 129 mm HH in 2008 and expected to grow at a CAGR of 3.4% (2008-13p)
Pay-TV penetration at 73% of TV HH of which only 14% are Digital HH (2008)
Analog is highly fragmented and with limited ability to finance digitization
DTH expected to garner 60% market share of new Pay-TV HH over next 5 years as per MPA 2009 estimate
99% 96%89%
67%
28% 26%18%
9%-5%
-17%
9%
27%
60% 62%
63%
62%
63% 61%
4%1%56%
43%29%19%
11%12%7%2%
-20%
0%
20%
40%
60%
80%
100%
2004 2005 2006 2007 2008 2009p 2010p 2011p 2012p 2013p
%s
hareofincrementalsubscribers
% Analog Cable TV % DTH % Digital + IPTV
5765
72
82
94
105
115
124131
137
56%
59%
62%
67%
73%
77%
81%84%
86%88%
-
25
50
75
100
125
150
175
2004 2005 2006 2007 2008 2009p 2010p 2011p 2012p 2013p
20%
30%
40%
50%
60%
70%
80%
90%
100%
A nalog Cable TV DTH Digital + IP TV Pay-TV as a % o f To tal TV HH
129136 142
148 152 155
106105
104103
10096
209215
220225 229 233
236 239241 243
103 110116 122
888991
9464%
63%62%60%
59%
56%54%
53%51%
49%
50
75
100
125
150
175
200
225
250
2004 2005 2006 2007 2008 2009p 2010p 2011p 2012p 2013p
NoofHouseholdsinMM
40%
45%
50%
55%
60%
65%
70%
TV HH Non-TV HH TV as of % of Total HH
Source: MPA report 2009
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5
0 01
4
11
18
24
29
34
38
0
10
20
30
40
50
2004 2005 2006 2007 2008 2009p 2010p 2011p 2012p 2013p
No.ofhouseholdsinmm
0%
5%
10 %
15 %
20 %
25 %
30 %
35 %
40 %
45 %
2004 2005 2006 2007 2008 2009p 2010p 2011p 2012p 2013p
% DTH HH to Tota l HH % DTH HH to TV HH
DTH % of Cable HH DTH % of P ay TV HH
DTH exponential market growth
DTH leading the nation wide
digitization wave
DTH HH increased from 1 mm in 2006
to 11 mm in 2008(Source: MPA 2009)
Increased DTH penetration will drive
continuous growth of DTH HH
Source: MPA report 2009
Source: MPA report 2009
Rapidly growing - DTH Subscriber base
DTH % of HHs Increasing penetration
CAGR:
20.7%
(200
9p-13p
)
Increased competition fueling high
growth
High end audio-video quality leading
to increased penetration
DTH as a % of TV HH is expected toincrease to 24% by 2013 (Source: MPA
2009)
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Key industry milestones
-
2
4
6
8
10
12
Apr-05
Aug-05
Dec-05
Apr-06
Aug-06
Dec-06
Apr-07
Aug-07
Dec-07
Apr-08
Aug-08
Dec-08
Dish TV (mn) DTH HH (mn)
Launch of DTH
Services by Dish TV
in select markets
Launch of DTH
Services by Dish TV
in select markets
Launch of DTH
Services by Dish TV
in select markets
Launch of DTH
services by Tatasky
Launch of DTH
services by Tatasky
Dispute over
content settled
between Dish &
Star
Dispute over
content settled
between Dish &
Star
DTH subs breach
the 2 mn mark
between 2 players
DTH subs breach
the 2 mn mark
between 2 players
Dispute over
content with Sun TV
settled
Dispute over
content with Sun TV
settled
DTH subscribe
base at ~10 mnsubs
DTH subscribe
base at ~10 mnsubs
Launch of DTH
operations by
Sun Direct
Launch of DTH
operations by
Sun Direct
Voluntary Digitization
of Cable players
started to launch
digital cable services
Voluntary Digitization
of Cable players
started to launch
digital cable services
Trigger on
Digitization CAS made
mandatory in select
parts of metros
Trigger on
Digitization CAS made
mandatory in select
parts of metros
Launch of DTH
operations by
Reliance
Launch of DTH
operations by
Reliance
Launch of DTH
operations by
Airtel
Launch of DTH
operations by
Airtel
Subscribers in mm
Source: Dish TV
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Current DTH landscape
Source: MPA report 2009 ; 2: Dish TV estimates
Company
Group Zee Group Tatas Sun TV Reliance ADAG Bharti
Launch Date2 Oct 03 Aug 06 Jan 08 Aug 08 Oct 08
Subscribers Dec 081 4.5 3.2 2.3 1.1 NA
Ownership2 Public Private Private Division of R.com Division of Bharti
Technology2 MPEG2 S1 MPEG2 S1 MPEG4 S1 MPEG4 S1 MPEG4 S2
Geographical Spread2 ***** *** ** ** *
Distributors2 ***** *** ** **** *
Pricing Strategy2 ***** ***** *** ***** *****
Channels tie ups1 225 200 170 200 1502
Services2 40 19 29 54 32
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Industry -Key regulations
Licensingregulations
Total Foreign investment limit of 49% with a sub limit of maximum 20% for Foreign Direct Investment
Uplink centre in India
Set-top boxes have to be BIS compliant
License Fee at 10% of subscription revenues (Proposed for 6% under approval)
Initial license validity of 10 years; renewable there after
Inter ConnectRegulation
Content providers have to provide content to all broadcasters; Pricing flexible
Prohibits broadcasters from guaranteeing minimum number of subscribers
Quality of ServiceRegulation
Subscriber to be offered STBs on Rental / Hire purchase / Sale
Mechanism to handle customer complaints & grievances
Reference Interconnectoffers
Pricing information on content of the broadcaster
Max 50% of Non CAS Cable Rates
A-la-carte offering to be allowed
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DISH Market leader in DTH
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Company Business
Market cap
(US$m)
Revenues
(US$m)
Dish TV (73%) Indias largest Direct to home satellite distribution company 888 153
Zee EntertainmentEnterprise Ltd (42%)
22 entertainment channels covering genres GEC, Movies, Sports, Music,
Religious, Comedy, Lifestyle1,575 453
Zee News Ltd (54%) 11 channels covering genres news, business, and regional GECs 204 106
Wire & Wireless IndiaLtd (49%)
Indias largest Cable distribution company 87 57
ETC Networks (71%) Music and regional channels, education business 23 14
Dish TV From Indias largest media conglomerate
Note: The % figures in bracket indicate shareholding by Mr Subhash Chandra & family; M.Cap as of July 30, 09 ; Revenues as per audited statements of FY 2009;
Source: Dish TV
Essel Group
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Dish TV - Business model
Up-front subsidy on set top boxes to acquire subscribers
Subscription revenues received in advance as per the chosen plan by subscribers
Other developing revenue streams
Teleport
Movies on demand
A-la carte
Carriage fees
Advertisement
Benefits of economies of scale to accrue moved from variable payment of content cost to a fixed
payment structure
Focus on improving ARPU, reducing churn and subscriber acquisition cost (SAC)
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Dish TV Key strengths
Largest channeloffering withdiversified
content
Largest number of channels offered on DTH platform 240 channels & services (Jun09)
ZEE brand name and content backing ==> One of Indias leading media group
Continuous focus on strong regional content in linguistic zones
Leverage in content tie-ups due to a dominant market leadership position
Sales & Distributionnetwork
Pan-India presence through 800 distributors & ~48,000 dealers across 6600 towns as ofJun 09
Network managed by over 200 sales personnel 8 zonal and 9 regional offices (Jun 09)
~600 Dish Shoppees to provide demo product experience to prospective users as of
Jun-09
Incentive of dealers is per STB sold
Advancedinfrastructure
Sufficient capacity to broadcast increasing channels current 9 ku band transponders
Model geared to grow in future adding to transponder capacity and technology
upgrade on cards
Heavy capex investment enables to deliver a high end audio-video quality
Market Leadership
Perceived as the industry pioneer with largest subscriber base
Carried and distributed by majority third party distributors and dealers
Strong Branding with consumers
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Dish TV Strategy
Customeracquisition
strategy
Focused marketing leading to creation of a BRAND SRK campaign
Largest content offering and digital viewing experience
Aligned dealer incentive structure-Higher incentives for subscriber at
higher packs
Competitive pricing, A-la carte offerings and ease of making payments
Distribution and after sales service
Customerretentionstrategy
Promotions and dealer incentives offered on an ongoing basis to retain
customers through innovative packages
Over 350 Dish Care Centers (DCCs) & service franchisees providing
installation and after sale-service as of Mar-09
In-house call centre, operating 24*7 with capacity of up to 800 operators
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DISH TV - Competitive position
3.6
11.1
2.7
4.7
75.7%
42.4%
0
2
4
6
8
10
12
Dec-07 Dec-08
0%
10%
20%
30%
40%
50%
60%
70%
80%
%S
hare
Total DTH HH Dish TV HH Dish TV Market Share
Players with large and stable subscriber base to emerge as winners in the longrun..Dish TV well placed being the largest player in the DTH industry
Source: Dish TV Source :Total DTH HH as per MPA report 2009; Dish TV HH Gross Subscribers as per Dish TV
Dish market share on total subscriber baseDish TV Increasing number of subscribers
2.7
3.0
3.4
3.9
4.7
5.1
5.5
5.9
2.2
2.5
2.9
3.4
4.0
4.3
4.6
5.0
2
3
4
5
6
Q3
FY08
Q4
FY08
Q1
FY09
Q2
FY09
Q3
FY09
Q4
FY09
Q1
FY10
Q2
FY10
Gross Subscriber base MM Net Subscriber Base
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Dish TV Financials
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Dish TV - Financials
4127
1909
7377
1,000
3,000
5,000
7,000
9,000
FY 07 FY 08 FY 09
INRMM
-1889
-2196
-1885
-53%
-26%
-99%-2500
-2000
-1500
-1000
-500
0
FY 07 FY 08 FY 09
-100%
-80%
-60%
-40%
-20%
0%
Source: Audited financials
Source: Published quarterly results
EBITDA - AnnualRevenues - Annual
Aggressive subscriber acquisition coupled with higher marginsSource: Published quarterly results
Source: Audited financials
CAGR: 56.9%
Revenues - Quarterly EBITDA - Quarterly
1363
1121
1644
1733
1927
2071
2467 2575
1,000
1,600
2,200
2,800
Q3 FY08 Q4 FY08 Q1FY09 Q2 FY09 Q3 FY09 Q4 FY09 Q1FY10 Q2 FY10
INR
MM
-642
-538
-667
-874
-390
145
231
449%
-20%
-50%
-41%-39%
-57%
6%
2%
-1000
-750
-500
-250
0
250
Q3 FY08 Q4 FY08 Q1 FY09 Q2 FY09 Q3 FY09 Q4 FY09 Q1 FY10 Q2 FY10
-100%
-80%
-60%
-40%
-20%
0%
20%
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18
Lower content cost driving higher margins
Source: Company
Contribution margin are steadily improving.. business heading towards EBIDTA break even
363 420 502 646 755 804 867 929 670 881 925
10871024
319
91171
202
234
529 540588
971
80%
61%
54% 54%
46%46%
71% 71%73%
60% 61%
70%
41%39%40%
30%27%
29%29%
20%
59%
39%
0
500
1000
1500
2000
2500
M ar-07 Jun-07 Sep-07 Dec-07 M ar-08 Jun-08 Sep-08 Dec-08 M ar-09 Jun-09 Sep-09
Subsmn
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Content Cost Contribution
Content Cost (% Subs Revenue) Contribution (% Subs Revenue)
454
591704
880
1074 13321407
2012
1517
Dish TV moves
from variable to
fixed price content
cost contracts
16411905
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Key business metricsARPU
ARPU under pressure with increased
competition
Rational pricing to prevail as low pricing
not sustainable over long term
Source: Dish TV; ARPU = (Subscription revenue + activation charges) / Avg. subscribers during the period; SAC = Subsidy on STB+80% of marketing exp.+Comm. to dealers
Subscriber acquisition cost
Focus on reducing subsidies Moved to a
model of charging for a bare box andun-bundling of the content fees and the
Set top boxes
142
132
137150
164
142
158
139
100
110
120
130
140
150
160
170
180
Q3 FY08 Q4 FY08 Q1FY09 Q2 FY09 Q3 FY09 Q4 FY09 Q1FY10 Q2 FY10
INR
2034
1880
26342601
2832
2505 2487
2635
1,000
1,500
2,000
2,500
3,000
Q3 F Y08 Q4 F Y08 Q1FY09 Q2 F Y09 Q3 F Y09 Q4 F Y09 Q1F Y10 Q2 F Y10
INR
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Summary Financials Quarterly
Quarter ended Sep-08 Mar-09 Sep-09
Gross Operating Revenue 1,733 2,071 2,575
Expenditure 2,607 2,027 2,344
EBITDA (874) 44 231
Add: Other Income 10 4
Less: Depreciation 495 644 730
EBIT (1,368) (590) (495)
Less: Financial Exps 171 217 66
PBT (1,539) (807) (562)
Provision for Tax 2 2 0
PAT (1,541) (809) (561)
Operating metrics Jun-08 Mar-09 Sep-09
Subscribers Added (mm) 0.53 0.35 0.41
SAC ( Rs/sub) 2,601 2,505 2635
ARPU ( INR ) 150 131 139
Source: Dish TV Earnings release and published quarterly results; Amounts in INR MM unless other wise mentioned
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Investment summary
Large and growing
DTH market
Subscribers expected to grow from c.17m in 2009 to c. 37mm in 2013 (MPA 2009 report)
Competition to fuel growth to the DTH industry currently only 6 players
Pioneer and leader ofDTH services in India
Dish TV is the only player in the listed space in India and has been recognised as a BRAND
First mover advantage ~1 year lead over nearest competitor and ~ 3 year lead over
others
Leader in the DTH industry - largest subscriber base ~ 5.9 mm (Sep-09)
Backed by Zee Group One of Indias leading Media group
Full-servicebusiness model
Basic subscription packs
Value added services
Bandwidth
Teleport services
Large distribution
network
Wide reach to 6,600 towns through 800 distributors and 48,000 dealers (Sep 09)
8 Zonal and 9 regional offices (Sep 09)
Largest channeloffering withdiversified
content
240 channels & Services
Content tie-ups at fixed rates largest subscriber base to provide economies of scale
Advancedinfrastructure
Only player with sufficient capacity to broadcast increasing channels current 9
ku band transponders Model geared to grow in future adding to transponder capacity and technology
upgrade on cards
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Questions?
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Thank you