Demonetization hits ARPUs and subscriber additions

Demonetization weighed on gross subscriber additions and ARPUs in 3Q, and the situation has not normalized yet. Slower Ph IV digitization could put pressure on 4Q subscriber adds. Management expects smaller increase in content cost going forward and new license fees regime in next few months.

Management suggested that F3Q17 revenue could have been 8% higher absent the demonetization impact.
While Dec-16 and Jan-17 have seen some improvement, revenue is still not back to pre-demonetization levels, and gross subscriber additions and ARPUs could remain pressured in 4Q.

While ARPUs are likely to be lower than previously expected, management hinted at a smaller increase in content costs as well, due to increasing mix of Zing and Rs99 packs along with downgrades to lower base packs. Management expects F17 margin (net of entertainment tax) to be 34% vs 35-37% as guided earlier.

Dish does not see an issue in getting CCI approval for the merger with Videocon d2h as the DTH industry is 35 – 38% of the total Cable and satellite industry combined. Churn rate for the quarter was 0.9%, which Dish is looking to maintain in Q4 as well.