Is Videocon d2h Market Leader ?

Videocon d2h believes it is a leader in terms of incremental sub adds in FY15 – net sub base of ~10.2m (+20% YoY) with est. overall share of ~20% (Dish is the market leader with ~23-25%). Momentum in the overall market growth seems strong – like Dish TV, VDTH expects to sustain the current run-rate in
sub adds in 1H (1.3-1.4m gross adds guidance). It expects 2HFY16 to be better driven by phase-3 digitalization. Encouragingly, churn is stable at ~0.8%

The management spoke of three drivers of an increase in ARPUs – a) price hikes (taken price hikes of 6-7% on avg in Feb, and expects to take another round in Sep which should offset the impact due to higher service tax); b) HD adoption (an impressive ~30% of incremental subs for VDTH; now ~10% of sub base vs. 5% FY14-end); and c) value-added services. Overall it expects ~10% growth in ARPUs in FY16. For Dish TV, our assumption of ~5-6% p.a. increase in ARPUs seems comfortable at this point.

Higher content cost visibility ties in with Dish TV mgmt commentary; they also expect margin leverage (next major negotiation in Sept 16; guide to a modest single-digit increase in content costs).