Dish TV India to Raise Prices

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26 May 2011
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NEW DELHI – Dish TV India Ltd., a direct-to-home television distribution company, Thursday said it plans to increase the price of its set-top boxes by 150-200 rupees ($3.34-$4.45) a unit from July 1, reduce free trial periods and add 3.5 million users this fiscal year in an effort to expand its operating margins.

This is the second time Dish TV India, an Essel Group company, has raised prices in the past five months. It also increased prices in February.

Direct-to-home television distributors offer discounts on hardware such as set-top boxes and dishes and free viewing for a few months to attract customers because of stiff competition. Dish TV India, which had 10.4 million users at the end of March, competes with state-run DD Direct, Bharti Airtel Ltd., Reliance Communications Ltd., Videocon Industries Ltd., Tata-Sky Ltd. and Sun Direct TV Ltd.

Dish TV India expects its earnings before interest, tax, depreciation and amortization, or Ebidta, margin on a standalone basis to expand to 25%-27% this fiscal year from 21.4% last year, the company's chief operating officer Salil Kapoor said.

"I think we're going to see some stable growth happening in the next few years," Mr. Kapoor said. But he didn't give any outlook on revenue and profit.

Dish TV India expects to be in a better position to negotiate the costs of buying television content from broadcasting companies with the likely subscriber additions in the year through March 2012.

"Content cost is the major cost. We don't see much increase there [this fiscal year]," Mr. Kapoor said.

Research firm RNCOS forecasts the Indian DTH market will grow at a compound annual growth rate of about 28% during 2011-2014 to reach 69 million users. DTH service providers, with 30 million users currently, saw new users rise about 50% in 2010.

Dish TV India expects operations to become cash flow positive either by the end of the second quarter of this fiscal year, or by the early part of the third quarter, Mr. Kapoor said.

The company paid 5.04 billion rupees--almost a third of its revenue of 14.35 billion rupees--to buy content last year.

"As of now, there is no outside fund infusion that we're looking at," Mr. Kapoor added.

Dish TV India had about 3.6 billion rupees in cash at the end of March.
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