Fixing cracks in Agra’s digital driveway

[Thakur]

MUMBAI: Agra is one of the worst digital addressable system (DAS) markets in India. Consumer ARPU (average revenue per user) is miserably low, multi-system operators (MSOs) were fighting against each other till September 2014, and local cable operators (LCOs) have not focused on increasing cable TV rates. For more than a year and a half after DAS got implemented, nothing has been corrected. But what makes us paint such a sorry picture? Agra-based Sea TV Network, a listed company, reported Rs 18 crore (Rs 180 million) as revenue in FY14 but 82 per cent of this was receivables. This means that revenue was booked but money remained uncollected. The MSO expects to collect this mainly from its LCOs. In FY13, the year before DAS, Sea TV Network’s receivables comprised 61 per cent of revenue. Even this is high compared to its bigger peers such as Hathway Cable & Datacom and DEN Networks, who have 35 per cent of their revenue component as receivables. For all the five MSOs operating in the city, collections from LCOs have been really pathetic. Why Agra is taking so long to start the business process of digitisation? One peculiarity of the market is that a national MSO started operations here after DAS came into force. Hathway Cable & Datacom entered Agra in June 2013—and this was not through a joint venture partner. Hence, the only way it could get market share is by swapping set-top boxes (STBs). This spoilt the market further. LCOs had a joy ride when it came to paying to the MSOs the subscription revenue that they collected from their consumers. However, the Agra market has always been tricky. Truce among the MSOs never existed, despite consumer ARPU being low. When there were just two local MSOs for several years, they fought bitterly. Moon Cable was then the exclusive distributor of Star channels and did not provide these popular channels to rival MSO Sea TV Network. For three years, Sea TV Network did not have any Star channels and so priced its services at Rs 35 per month. Under this situation, Moon Cable was under constraint to exercise proper pricing power of its cable TV services. Even as Sea TV Network got to carry the Star India channels, Digicable entered Agra in 2007. Competition did not stop and DEN Networks’ entry in 2012 only worsened the ground situation. Hathway was the last to camp in Agra, after DAS had been mandated in the city. Along this line of battlefield, consumer ARPU stagnated at Rs 100. Agra, a tricky market:  No history of MSO truce. Even when there were just two local MSOs, they fought bitterly. Sea TV Network did not have any Star channels for three years and so priced its services cheap. Rival Moon Cable was then exclusive distributor of Star channels for Agra. Thereafter came Digicable, followed by DEN in 2012. Hathway came last in June 2013. Consumer ARPU stagnated at Rs 100. How MSOs stack up For long Agra was not visited by the national MSOs. After IndusInd Media & Communications Ltd (under Incablenet brand) and Siti Cable retreated from Agra, Moon Cable captured the market till Sea TV Network launched operations in 2004. The two local MSOs enjoyed the market share and it was only in 2007 that Digicable entered Agra. Ahead of DAS, Moon Cable entered into a 50:50 joint venture with IMCL in March 2013. So now, Agra has four national MSOs and a local MSO in the form of Sea TV Network. Sea TV Network leads the market with an estimated deployment of 100,000 STBs, followed by DEN Networks with 70,000. Incidentally, Hathway is at the bottom with 30,000 STBs as it was the last to enter the market. With low cable TV ARPU and high entertainment tax in the state of Uttar Pradesh, DTH presence in Agra is negligible.

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