Dish TV raises $100 m via GDR issue

Dish TV, India’s largest DTH company with over 6.3 million subscribers, on Monday announced raising $100 million through a global depositary receipts (GDR) issue.

The company is issuing 117,035 GDRs at a price of $854.5 per GDR to Apollo Management, which is one of the top asset management companies with specialisation in media space. This amounts to issuance of 117,035,000 new equity shares at a price of Rs 39.80 per share of the face value of Re 1 each.

The offering is expected to settle on November 30, 2009, subject to customary closing conditions. Post this issue, Apollo Management, which has over $50 billion in assets under management, will own 11% of the expanded capital of Dish TV, a company statement said.

“Apollo’s interest in the company is a clear recognition of the attractiveness of Dish TV’s market position, its robust business plan and the success that has been achieved thus far.

With their investment, Dish TV will be well capitalised to build on its market leadership and pursue its ambitious business objectives” Jawahar Goel, managing director, Dish TV, said.      

This fundraising will enable Dish TV to further accelerate subscriber growth through its network of over 800 distributors and 48,000 dealers across 6,600 towns.  The money would be used for funding subscriber acquisition, which mainly involves cost of set-top boxes.

The Essel Group company hopes to achieve a subscriber base of 7.5 million by end of March, Goel said, adding it is looking to add another 3 million subscribers in 2010-11.
The company has a capital expenditure plan of Rs 750 crore till end of 2010-11, which will mainly be for acquiring new subscribers.

“The GDR issue proceeds are sufficient to acquire 2.5 million subscribers...the main cost is the set-top boxes, which is costing us around Rs 2,500 per unit,” he said.  Dish TV reported revenues of Rs 257.5 crore in the September 2009 quarter, a 48.5% jump over same period last year, and is expected  to break even in the next 2-3 quarters.

A portion of the revenues goes towards one-time subscriber acquisition cost while a chunk of operating costs of DTH companies, about 40%, goes towards content costs.

“Ramp-up in new customer acquisition will help us to bring  down the relative content costs percentage apart from additional revenue from new subscriptions,” Goel said.