Scaling the broadcast net

We expect increases in TV penetration and rising income levels to drive growth for the DTH subscriber base in India, which should increase to 50MM by 2013 from 24MM currently. Dish TV is well positioned to capture a large part of this growth given its strong brand and deep distribution reach across c. 6,600 towns. We forecast Dish TV’s gross subscriber base to increase from 6.9MM in FY10 to 13.8MM by FY13E. In addition, competitive intensity is easing, which should aid ARPU expansion and lower costs.

Dish TV’s subscriber base has reached a critical scale and new subscriber additions as a percentage of mature subscribers is declining.

While Dish TV had an early mover advantage, being able to obtain a DTH license in 2004, competitive intensity picked up with entry of Tata-Sky in 2006 and subsequently intensified with entry of Sun, Big TV, Bharti-Airtel and Videocon between 2007 and 2009. As a result, ARPUs and market share for DISH came under pressure. Recent industry trends suggest that competitive intensity is now easing and players are incrementally becoming more rational. This is evidenced by the relative stability in Dish TV’s ARPUs and moderation in consumer acquisition costs over the last 4 quarters.