MUMBAI: Despite experiencing a troubled quarter due to the implementation of the new TRAI tariff order (NTO), cable TV and broadband service provider GTPL Hathway is optimistically looking at the transformation. Even as small multi system operators (MSOs) are figuring out the new regulatory framework, GTPL Hathway sees potential in consolidation to increase its footprint across the country.
“We are also expanding into other markets. Now because of NTO there is no area demarcation and we can enter all India. So we are planning to consolidate small players also as they are facing a lot of issues because of the new NTO. It is a good opportunity for us,” GTPL Hathway promoter and managing director Anirudhsinhji Jadeja said in an earnings call after the Q4 results.
GTPL Hathway seeded 8 lakh STBs, taking the total seeded boxes to 9.5 million in FY 19 but its digital paying subscribers declined by 200K due to the implementation of NTO and transformation of entire LCO base to auto-dunning mode, finally standing at 6.8 million.
However, GTPL Hathway business head Piyush Pankaj mentioned that the full effect of NTO was not seen in the Q4 outcome as implementation was going on in February and March but the company is hoping EBITDA to rise due to it. “Going forward you will see an increase in subscription revenue and in the pay channel cost. By quarter 1, you will see the full implementation and the full effect,” he said. A lot of customers who churned out or who had not activated the service are being brought back.
Jadeja also spoke on the same lines as Pankaj regarding increase in pay channel cost after NTO. He noted that some broadcasters have changed the pricing in April. Hence, the cable TV pay channel cost will be able to be cleared only by Q1. He added that they would come to know where the pay channel cost is headed in the next quarter after the Q1. He also claimed that entry-level package which is priced at Rs 250 for consumers, even in phase III, phase IV area, has not changed drastically.
“We are talking about Rs 250 inclusive of taxes. Overall it is coming somewhere around Rs 210. If we talked about phase III and phase IV combined, that was the cost in the market. Phase IV was somewhere Rs 180-200 and phase III was somewhere Rs 200-250. So the pricing is almost the same on that basis. Plus the customer has options now that if they want to select lesser cost packages, they can do that,” Pankaj commented.
On the benefits of the NTO, Jadeja added that it has opened up avenues for DPOs as they don’t have an area restriction now. He said that markets with better opportunities especially like Maharashtra, Gujarat and West Bengal and others that need to have major penetration like Andhra Pradesh, Telangana, Assam, Bihar, Jharkhand, etc., will be the focus for further expansion.
Pankaj said that earlier the company used to bill LCOs on the basis of what is prevailing in that market but it is now happening according to the customer choice. He added that the customer is choosing channels which are higher priced and the subscription has gone up. He shared that the outflow of LCOs has gone up in the market and that is why their billing to LCO has gone up.
“So earlier when we were billing around average Rs 73-74, in Q4 we are going to see that average is coming to Rs 116-117 and further on in February and March when the implementation was going on and the customers were making the choices. So the April and May months are going to be where all the choices had been made by the customer and you will get somewhere stable revenues that will be the average revenue. We are expecting that it will be somewhere around Rs 130, which is going to be stable in the market,” he explained.
Jadeja contended that in FY20, the company is hoping to seed another one million set top boxes in existing markets as well as some parts of new geography. He also said that capex is going to be around Rs 160 crore for FY20, same as FY 19. Moreover, the company is expecting there would be net debt reduction of around Rs 40 crore to Rs 50 crore in FY20.
