Bright for Phase II of Digital Cable / TV

Phase I of the DAS process has been a reasonable success so far with the cities of Mumbai and Delhi almost fully digitized. Kolkata and Chennai have witnessed delays, but these are more due to state-specific issues. We understand that momentum has picked up in Kolkata and digitization should be completed in the next few months. Chennai is a regional market and hence does not have a significant bearing on pan-India players such as Hathway, Dish TV and Zee.

High level of awareness amongst Phase I subscribers. We believe this should apply to Phase II subscribers as well, which includes reasonably big cities such as Bangalore, Pune, Hyderabad and Ahmedabad.

The benefits of digitization are well known and hence we believe there should be little push-back from most of the Phase II consumers as well. This should at least help in fast-tracking the process as time spent on customer education may be less than earlier perceptions.

The average time spent per day by households on watching TV is in excess of six hours, with Mumbai
respondents watching close to eight hours. This is much higher than the national average of ~2.5 hours and 5.3 hours in the US. We believe the trends could be similar in Phase II cities as well (though viewing hours may vary across cities), thus showcasing the importance of TV entertainment and potential for ARPUs to improve.

Companies are also witnessing promising trends in the cities of Pune, Aurangabad, Nashik, Vadodra, Ahmedabad, Surat and Rajkot which in our view augurs well for the roll-out of DAS.