NOIDA, India; January 30, 2017 - Dish TV India Limited (Dishtv) (BSE: 532839, NSE: DISHTV) today reported third quarter fiscal 2017 consolidated subscription revenues of Rs. 6,921 million, up 3.3% Y-o-Y and operating revenues of Rs. 7,480 million, up 2.4% Y-o-Y.
Dish TV harmonized the accounting of entertainment tax in line with industry practice with effect from 1 April, 2016.Â Earlier, entertainment tax was recorded as an operating expenditure however effective 1 April, 2016, it is netted-off against subscription revenues. 3Q FY16 figures have been regrouped accordingly for the sake of comparison.
Year-on-Year revenue growth would have been higher considering service tax rate of 15% in 3Q FY17 as against 14% in the corresponding quarter last fiscal.
EBITDA for the quarter was Rs. 2,495 million compared to Rs. 2,654 million in the corresponding quarter last fiscal. EBITDA margin stood at 33.4%. Profit after tax was Rs. 267 million.
The Board of Directors in its meeting held today, has approved and taken on record the unaudited results for the quarter ended on December 31, 2016.
The DTH industry in India with Dish TV leading the way has been one of the early adopters of the cashless and prepaid methods of revenue collection. The DTH company had close to 30% of its subscribers paying it through various means of online recharges with the balance using the Electronic Payment Recharge System (EPRS).
But that was till 8 November, 2016.
With 86% of India's currency getting pulled out of circulation from the very next day, recharges where the medium of transaction was through EPRS became weaker than initially expected.
Mr. Jawahar Goel, CMD, Dish TV India Limited explained why, "Limited cash supply made people defer their DTH recharges by a few days or weeks depending on the urgency of other basic necessities. The impact was stronger in the second tier and below towns and cities as most of the economy in these areas runs on cash. Our subscription revenues during the quarter could have been higher by around 8% in a non-adverse scenario. Lower growth eventually resulted in lower average revenues per user as well."
The fiscal third quarter being the period of festivals is generally the largest contributor to new subscriber additions during the year. Demonetization however impacted Dish TV's new subscriber additions also with the company recording an estimated 8-10% lower subscriber adds during the quarter.
Several steps were taken to keep consumers and dealers hooked on.
"Subscribers as well as trade partners were extended temporary credit facilities basis their past transactions pattern. Subscriber awareness drives to promote alternate methods of payment were run both on the ground and on screen in addition to various other initiatives," said Mr. Goel.
Looking at the brighter side of it, demonetization does promise an eventual less-cash dependent population that should use online payment interfaces over cash for DTH recharges. That's going to be a boon for the DTH business.
"Though demonetization has led to an initial distress, it also will result in certain structural changes that are going to benefit the economy in the long run. As far as our business is concerned, the effect has already started coming in. As online payment transactions, credit cards and a less-cash society become buzz words today, we are happy to note an increase in our online transacting subscriber base from 30% to around 38% with around 22 digital wallets and the like being integrated with the company. Every online recharge transaction vis-Ã -vis EPRS based transaction implies savings on recharge commissions paid by us," Mr. Goel said.
Commenting on the results, Mr. Goel said, "We believe that the negative impact of demonetization is only temporary and that with a strong subscriber growth rate, tight control on costs, reasonably steady free cash flows and a healthy balance sheet we should deliver sustainable growth. The rollout of the Goods and Services Tax (GST), a hopefully favourable license fee regime and a revenue conscious cable industry should only add to the strengths of Dish TV going forward."
Ministry of Information and Broadcasting (MIB) announced on 22 December, 2016, that it was pushing forward the mandatory digitization Phase 3 date to 31 January 2017 and Phase 4 date to 31 March 2017. Dish TV on its part continued to seed set-top-boxes in both Phase 3 and 4 markets, the largest of the four digitization phases, steadily during the quarter.
Work continued on the Dish TV-Videocon d2h proposed merger as well with necessary applications being filed during the quarter with the Competition Commission of India (CCI) and the Stock Exchanges for obtaining their approval.