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Dish TV: not much of a dish

LiveMint logoLiveMint 27-05-2014 Pallavi Pengonda

Dish TV India Ltd’s shareholders have reason to be disappointed. The stock did not rally in the run-up to the elections and has considerably underperformed the S&P BSE 200 index this year. Not without reason. There have been concerns on subdued subscriber additions and unexciting Arpu (average revenue per user) growth. Moreover, Dish TV’s December quarter financial results were rather weak, keeping sentiment muted. The results of the March quarter, which came in below expectations, offer little respite.

Dish TV reported a net loss of `149 crore, sharply wider than a loss of `43.62 crore in the same period last year. Performance at the net level looks miserable due to accounting of prior-period items worth `116 crore, which is one-time in nature, the company said. In that light, perhaps performance at profit before tax (PBT) looks more reasonable. For the March quarter, Dish TV posted a loss `32.6 crore PBT compared with a loss of `43.6 crore in the same period last year. Still, analysts are not satisfied. A reason could be that operating profit growth (up 7%) lagged revenue growth (up 14.6%). That’s primarily because some cost (licence fees, other operating costs and other expenditure) increased at a rather rapid pace. Although the company’s annual Arpu increased to `170 from `158 last year, it was positively influenced by some accounting changes that Dish TV made.

Also, on a consolidated basis, Dish TV’s negative net-worth has increased to `312.60 crore on 31 March from `155.6 crore last year because of accumulated losses. Sure, the company has managed to reduce its debt a tad but that’s hardly going to excite shareholders.

Meanwhile, subscriber additions were better. Dish TV added 226,000 net subscribers in the March quarter compared with 220,000 in the December quarter. Abneesh Roy, associate director, institutional equities, at brokerage Edelweiss Securities Ltd, said, “Dish TV’s subscriber additions in the March quarter were helped by Zing (a product aimed at customers interested in regional content) launch in Odisha and West Bengal. Moreover, the company’s incremental market share has improved to 24% from 20% in the same period last year.”

Shareholders would do well to keep track of subscriber additions and Arpu numbers. Price hikes should help Arpu. One trigger for the stock could be the implementation of the goods and services tax (GST). Motilal Oswal Securities Ltd said in a recent note there could be a potential upside if entertainment tax is subsumed into GST. As of now though, this dish could have been cooked better.

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