On pushing for carriage fees for DTH operators.
This is something we have been pushing back at the broadcasters because ultimately they are getting an unfair share of their revenues from a DTH platform. While DTH contributes only about 27%-28% of the subscriber base it is contributing almost 60% of the revenues. This is without taking the carriage subsidy and if one takes that into account as well then broadcasters are basically living off DTH.
Now that obviously is not a sustainable situation and there are many industry initiatives that we are ourselves taking to push back on this unfair balance and we hope that, that will correct. While Dish TV may have initiated it, ultimately it is a collective effort from the industry players.
On how are the broadcasters reacting to this.
It is still early days and we are hoping to get some equity to the entire arrangement.
On possible carriage fee structure if this initiative gets through.
There are basically two options. The broadcasters will either have to reduce carriage payout to the multi-system operators (MSOs) thus bringing uniformity in the industry or end up paying carriage fees to DTH players. The choice is theirs. They need to be fair and cannot rob Peter to pay Paul.
On 164,000 new subscriber additions in the July-September quarter.
Given the current business environment, I think it’s a pretty good number. The market has been little soft for various reasons. The penetration of digital boxes either through cable or DTH has been very high in the phase I and II digitisation and any additional demand will only be replacement demand and phase III and IV will only happen by end of next year. As for covering the rural markets is concerned there is no urgency considering there is a lot of time still left.
So we can expect the market to be sort of tempered down for the next 2-3 quarters months or so. Also, overall macro scenario in the second quarter was very dull with inflation spiking, rupee depreciation etc. So in the overall scheme of things we are quite pleased that despite all the challenges we have managed to add the same number of subscribers that we did last year.
On further price hikes for set-top-boxes and or subscription packages.
We have been taking the price up at every available opportunity and certainly we will be looking to pass on increasing cost and will definitely have some movement in price at least by the fourth quarter.
On impact of recovery in the rupee dollar exchange rate off-late.
The Indian rupee has recovered significantly so we are adopting the wait and watch approach for now. Also, the overall global macro situation points to a weaker dollar and this whole tapering thing sort of cooling-off for the next five-six months, we don’t expect any big macro churn on that front as that was what drove the INR down. In such circumstances we don’t want to pre-empt and jump the gun.
While we are working on keeping the subsidy on STBs at a manageable level, and if the INR gets back to 53-54 our subsidy will be less than Rs 500 rupee a box. So we are quite comfortable currently and don’t want to choke out the market by unnecessarily taking the price to a level where the subscriber finds it unaffordable to get into the service.
On domestic sourcing of set-top-boxes (STBs).
We have been progressing well in that direction. We already have a domestic supplier lined up who has been supplying in small quantities. We are trying to build the domestic component percentage higher because ultimately if we have a domestic supplier but still depend on imports then it will not be of any benefit. That is a process which will take another three to six months for us to get a significant localisation component so that it actually protects us from the foreign exchange (Forex) fluctuations. We still have a high reliance on imported STBs but over time we can develop the boxes with higher degree of localisation and then we will be able to ramp it up. But these things will only happen gradually.
On transponder capacity expansion.
We are the largest in terms of bandwidth. However, we are still going to be adding capacity because it will help us to get stronger in regional content and offer related packages. We are fairly far down on the road with this and is a process that involves many parties and will take a little bit of time. We are hopeful that in the next 3-6 months we should be able to have a break-through in that.
On recently launched ‘DishOnline’ mobile streaming service.
We are very bullish on that. In fact, I think that is stepping into a new revenue stream which is totally untapped and additional to our business. It is also in line with the way the consumers preference is moving. Especially the younger generation, consumption of media is gravitating more and more towards mobile devices and laptops. We are the first to bring this to the market and competition is follow suit.
The new offering enables us a lot of flexibility as it is not about plain live content but we could add any content we want and do separate deals with content providers directly instead of going to the broadcaster/television channels. For example, I go to a production house and get rights for that content and actually put it out on this platform and monetise it. Similarly an interesting sports or outdoor channel available elsewhere can be streamed through the digital system without having to bother about having a license or anything like that.
The ability for me to do it is much more in this platform than in DTH where I am stung by a lot of regulations in terms of what I can transmit and what I can’t. Those constraints don’t apply in this digital platform.