DTH Sector 25% decline in subscriber additions

DTH India has not benefited from the digital addressable system (DAS) as multi-system-operators (MSOs) have kept the prices for set top boxes (STBs) low and there has been no change in subscription revenues despite the deployment of STBs (still operating on analogue tariffs). DTH operators, meanwhile, have hiked STB prices by c40% over the past 12 -18 months and subscription fees by c20%.

The DTH sector may see a decline in subscriber additions, possibly by c25% this year. Things may improve should cable TV players decide to raise their ARPUs. The gross subscriber base for the sector is estimated at 50m, with an active base of 38-40m. Incremental volumes (c70%) continue to come from Phase 3 and 4 markets.

Despite concerns over subscriber net additions, the DTH sector may raise prices further shortly and prices on STBs may be raised by another 10% at least. The price hikes have improved the quality of acquisitions for the sector overall, and the industry is seeing subscribers subscribing to higher-end plans. The focus is on improving balance sheets as well.There is no major industry-wide trend of subscribers moving from
present packages to lower packages.

There is a regulatory push towards ‘knowyour-customer’, the progress of which is slow and may take 5-6 months for cable TV operators to have complete subscriber information in place for the Phase1 markets alone. Cable TV ARPU in several markets is still at INR125-130. It will be tricky for cable TV players to make money from such low-end subscribers and MSOs may have to subsidise them.

The notion that cable TV players will not charge customers for servicing is misplaced. In the analogue regime, there was no hardware involved; however, the DAS regime involves hardware, and subscribers will need to pay for any repairs, reducing the disparity between the two sectors.