The rise of the DTH space

Bapun Raz

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India’s direct-to-home satellite (DTH) sector is set to overtake the US next year, with an active subscriber
base of close to 42 million as aginst a projected
customer base of 35 million in the US. Media Partners Asia (MPA) analysts report that the
growth is driven by aggressive subscriber
acquisition and a strong performance during the
festive season. “Subscribers came from rural areas, small towns and third-tier cities, as well as urban
areas (especially among lower-income homes, due
to competitive pricing and promotions),” says Vivek Couto, executive director of MPA. At a macro level, MPA feels that DTH operators are
looking to convert 90 million-odd homes in India
that do not have access to TV, with total TV homes
growing at about 7 million per year. Couto adds,
“Most of the DTH players are well capitalised — the DTH industry’s scale and deep pockets (where shareholders include names such as Tata, Zee, Sun,
News Corp, Bharti, Reliance, Apollo and Temasek)
are such that the six-player segment spends about
$150 million annually on marketing and $350
million per annum combined on content (as of CY
2010).” And though DTH players’ ARPU growth is expected to be moderate, between $3 and $4 over the next
three years, challenges such as transponder
capacity, high churn, subscriber acquisition costs
and limited pricing power continue to worry the
industry. But MPA sees four out of six DTH players
generating free cash flow after 2015, driven by scale and cost control. “Only Dish TV, as per MPA estimates, is generating positive EBITDA and it is
due to accounting treatment (i.e. set-top boxes are
capitalised as opposed to being expensed). Dish is
expected to start generating free cash flow by FYE
March 2013,” Couto said. MPA projections measure pay-TV penetration after
accounting for households that opt for multiple
services (i.e. cable and DTH). On this basis, pay-TV
penetration will grow from 79 per cent to 88 per
cent between 2010 and 2020. DTH will be the main
driver of subscriber growth, digital penetration and high-definition growth.


Sorce- http://www.business-standard.com/india/news/the-risethe-dth-space/437465/
 
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