Wednesday, January 13, 2016

Digitization in Phase 3 will be slow and gradual

Recent stay orders by four state high courts have postponed digitisation by couple of months, however we believe the impact will be broad based in slowing the overall process and completion may take c6 months. As per the broadcasting ministry Phase 3 digitization is estimated to cover c38m TV households across 630 districts and 7709 urban centres. After Phase 3 we estimate total digitized households to increase to c35% to c90 m TV households. Delay is particularly negative for Direct to Home (DTH) players (including Dish TV) as it limits their ability to benefit from subscriber growth. Delay allows smaller cable operators to get in more time to retain existing subscribers.

Broadcasters to benefit most from Phase 3 as sector subscription revenues rise by c45% to USD3; however monetization will be gradual over 9-12 months. Theoretically entire subscription revenues should be flowing to EBITDA, however due to rising competitive intensity and the need to invest in Over the Top (OTT) offerings, we see subscription EBITDA at no more than c60%. With expansion in mobile data users by 2x to
250m over the next 12 months, entry of global giants like Netflix in the OTT space, OTT investments by traditional broadcasters should see an increase

4 comments:

Mike Kruger said...

"completion may take c6 months" Completion of what? Digitization in those four states? I assume you don't believe the entire Phase 3 area could be digitized in that time frame.

Satish Yadav said...

After Phase 3 we estimate total digitized households to increase to c35% to c90 m TV households. this is very good for digitaization.for buying dish tv visit http://www.onlinedthservice.com

Mike Kruger said...

Thanks for your reply. How many analog cable subscribers do you think exist in Phase 3 areas?

I agree that current digital households are about 66 million ... 41 from DTH, 25 from cable. But the highest estimate of analog cable households in Phase 3 is 19 million. That would imply 85 million digital HH once Phase 3 is completed.

Am I making a mistake in my assumptions? Thanks

Mike Kruger said...

Does anyone understand why The gross additions of DTH subscribers always seem to happen at about the same rate, regardless of deadlines for digitization? In 3Q 2016 the gross adds were about 2.4-2.5 million .... actually a tiny bit less than in 2Q 2015. Even if cable gets a higher market share, why wouldn't DTH have higher adds than when there is no deadline?