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| Edited By: Ashish K Tiwari |Source: DNA |Updated: Mar 17, 2018, 06:42 AM IST
The information and broadcasting (I&B) ministry’s revised schedule, for digitisation of cable TV across the country, is seen as a significant development by operators.
This move, according to industry experts, is a positive and practical step.
According to analysts Nikhil Vora and Swati Nangalia at IDFC Securities, the I&B ministry’s response to Telecom Regulatory Authority of India’s (Trai) recommendations, is a critical development for digitisation in the country.
“We expect India to reach 86 million digital homes by 2015, as against over 30 million currently. However, the regulatory push towards digitisation could potentially underpin faster growth in the overall industry. The Cabinet approval is the final step for these proposals to get implemented, which is likely to be received in the next three months,” the analysts said in their report
In the next 5-odd years, India is likely to be the second largest digital market in the world, aiding the addressal of the industry’s biggest bane of ‘under-declaration’. This will lead to a significant leap (6.5 times) in the organised industry to $7.7 billion (from the current $1.2 billion). Similarly, the capital requirement of the industry would be pegged at $5 billion.
Some of the leading players in this segment include WWIL, DEN Networks and Hathway Cables. Analysts covering the space envisage over 50% returns on the stocks of these companies from current levels.
The cost of digitisation, largely, requires setting up optical fibre network and supplying set top boxes (STBs) to subscribers.
The key challenge, however, comes from local cable operators (LCOs), who have a vested interest in operating the analogue version and hence are not supportive of the digitisation policy. However, with the policy amendment expected soon, it will be mandatory for LCOs to adopt digitisation, which will improve the overall health of the cable TV industry.
A senior official from a leading cable TV company asserted that digitisation is very crucial for multi-system operators (MSOs), as it will bring in complete transparency as far as subscription numbers are concerned.
“MSOs are losing money on account of under declaration by LCOs. Digitisation will solve this problem to a great extent. Besides, the subscriber will now get better services at very attractive prices, since cable operators will get a level playing field to compete with the direct to home (DTH) players,” said the official requesting not to be identified.
A media and entertainment sector analyst with a domestic equity research firm, speaking on condition of anonymity, said, “The development is positive in the medium term for industry players. LCOs resorting to disclosing just about 10 to 15% of their subscriber base will eventually have to make complete disclosure. However, DTH operators will now have to face inter-segment competition in the metros and Tier I cities, as MSOs will be able to offer comparable services to subscribers. There is a possibility that average revenue per user (ARPU) for DTH operators may come under pressure. However, Tier II and III markets will continue to see growth in DTH subscriber base as MSOs / LCOs may take a while to spread their network there.”
In August 2010, Trai had suggested key recommendations for the Indian cable distribution space, including a sunset date of December 2013 for complete migration.
The ministry’s new rollout schedule in Phase I, suggests the launch of the new format, starting with four metros by March 31, 2012 instead of March 31, 2011, as proposed by Trai. In Phase II, which include cities with population of over 1 million to be covered by March 31, 2013, while the rest of the country is to witness analogue to digital migration by March 31, 2015. Paucity of STBs and related supply issues, in addition to the need for increased investments towards digitisation, were cited as key reasons for deferring Trai’s recommended sunset clause.
