Cable TV Digitization - steady progress and going firm

LCOs have largely procured and seeded digital boxes at subscriber premises. While transparency levels between MSO and LCO has always been a contentious issue, under reporting continues to be high even down the chain as LCOs typically operate through few individuals who act as collecting agents for localities. Under digital addressable system (DAS) transparency levels have improved at last mile and demand for boxes including two TV homes has been higher than anticipated.

LCOs have already received MSO agreements which provides for revenue sharing mechanism and the quality of service levels to be maintained by LCOs as per TRAI recommendations. Checks indicate that at least 60-70% of agreements are in place now. Agreement provides for 45% share in FTA channels and INR75 for pay channels (including FTA).

As highlighted earlier MSOs have already announced packages for DAS markets. A few LCOs have proactively started communicating to consumers about various packages and are also collecting CRF forms (mandated by TRAI), we believe this activity is seeing considerable delay. Checks with MSOs now indicate bill generation likely in month of January/ February vs November earlier. We think it is much likely that MSO will push mid end packages which could help improve ARPU.

Ability to negotiate content at attractive rates from broadcasters could help expand subscriber universe. LCOs pointed out that both Hathway and Den had attractive packages at the mid level and consumer acceptance likely to be high. For e.g. popular channels such as Star Plus is available at intro packs of Hathway/ Den and not available with Digi and In Cable as per LCOs.