Six to seven areas of operations will drive synergies for the merged entity in the first year of its operations
Dish TV, Asia Pacific's largest direct-to-home (DTH) company and part of the Essel Group, is eyeing significant synergies post the Videocon D2h merger with itself. According to senior executives, there are six to seven areas of operations that will drive synergies for the merged entity in the first year of its operations.
Speaking to DNA Money, Anil Dua, group chief executive officer, Dish TV India Ltd, said the Videocon D2h merger provides biggest opportunity for the company at present. "We will be looking at Rs 510 crore worth synergies in the fiscal 2018-19. Majority of this will come from having a bigger bargaining power with vendors for joint purchases, synergies in content/media buying, lower debt servicing costs, manpower rationalisation and so on," said Dua, adding that the combined entity enjoys 45% share of the Indian DTH market with a subscriber base of over 29.5 million.
Dish TV is looking to build further on these synergies in the coming years, and expects all the savings from the first year of operations to continue in the near future as well.
While the company did not share a break-up, Rajeev K Dalmia, chief financial officer, Dish TV India Ltd, said, "There will be six to seven areas of operations where we will derive these synergies from. Some of them include purchase of set-top-boxes, interest costs, content cost, back-end services, synergies on the revenue front from carriage fees, advertisement and value-added services. These are the main drivers being identified at present."
Post this exercise, the company will reposition the joint entity in a manner that speeds up growth, optimise on the envisioned synergies and future proof the scale enjoyed by combined operations. On infrastructure and manpower rationalisation possibilities, Dua said there will be some amount of best practices transfer for sure.
"If you look at service, Dish TV has an open market model while Videocon D2h has company operated model. So we have now decided to go for company operated service model too. This will benefit both brands, for example Videocon D2h had a certain number of direct service centres and now it will have much more because of the combined load. We will now have better control on the quality of service, better presentation of manpower, follow-up on customer complaints and so on. So that is one area that will see infrastructure consolidation. In fact, there will be more creation (of infrastructure) clearly leading to more productivity and efficiency, better return, loyalty and retention," said Dua.
As far as manpower rationalisation is concerned, Dua said it's a very small percentage compared to other big ticket saving items outlined earlier. "By comparison, manpower is a smaller item. And we are focusing on retaining good talent while maintaining both brands. Accordingly, we will have to retain the front-end field force and that's where maximum numbers are. While there are synergies in the manpower area the number of people in the combined entity will not go up for sure. There could be rationalisation of a couple of hundred people on a combined base of over 2,500 on the rolls," said Dua, adding that the combined entity has a strong manpower base of over 25,000 that includes off roll and call centre employees.
STRONG SIGNAL
- Six to seven areas of operations will drive synergies for the merged entity in the first year of its operations
- Merger could see rationalisation of a couple of hundred people on a combined base of over 2,500 on the rolls
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While the company did not share a break-up, Rajeev K Dalmia, chief financial officer, Dish TV India Ltd, said, "There will be six to seven areas of operations where we will derive these synergies from. Some of them include purchase of set-top-boxes, interest costs, content cost, back-end services, synergies on the revenue front from carriage fees, advertisement and value-added services. These are the main drivers being identified at present."
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