October 03, 2019
A perceptible shift seems to be happening in the subscribers’ base which has moved from multi-system operators (MSOs) to direct-to-home (DTH) players. As per ICRA note, during H1 CY2019, the three MSOs – SITI Networks Limited (SITI), Hathway Digital Private Limited (Hathway) and GTPL Hathway Limited (GTPL Hathway) – reported a cumulative decline of 5.0 million subscribers, whereas the listed DTH players (including Dish TV (India) Limited (Dish TV) and Bharti Airtel Limited (Airtel) reported a subscriber addition of 1.3 million during the same period. The reasons behind this shift include de-activation of subscribers amid confusion regarding implementation of the New Tariff Order (NTO) due to deferment of deadlines and; increase in cable bills as well as implementation of auto-dunning (prepaid billing model) by MSOs.
According to Ms. Sakshi Suneja, Assistant Vice President, ICRA, ‘‘The NTO has brought a level playing field between the DTH operators and the digital cable operators; and thus, quality of service has become an important differentiator for customer acquisition. Most of the digital cable operators consider the churn reported in subscriber base as transient and expect it to normalise, once the systems and processes are established. Nonetheless, some shift in subscribers from digital cable to DTH cannot be ruled out, especially with the rise in cable bills.’’
As for the past subscriber trends, ICRA notes that the annual net subscriber additions for Dish TV and Airtel, which had steadily increased during FY2014 to FY2016, averaging around 4.2 million subscribers per annum, declined to an average of 2.4 million subscribers per annum during FY2017-FY2019. On the other hand, the annual subscriber additions by the top-four MSOs remained healthy during FY2015-FY2017, averaging around 5.72 million subscribers per annum. The subscriber additions, however, tapered drastically to 2.9 million in FY2018 as the digitisation of Phase-III markets neared its completion and remained almost negligible till 9M FY2019, reflecting limited penetration in Phase-IV markets. These operators reported a cumulative decline of 5.1 million subscribers in Q4 FY2019, amid the then on-going implementation of the NTO.
The tables could, however turn, in MSOs favour over the next one year as the new entrant, Reliance Jio (which was commercially launched in September 2019) gains ground. While its prices of broadband are largely in line with peers (of wired broadband), Reliance Jio has an edge over its competitors (especially Bharat Sanchar Nigam Limited) by virtue of its bundled offerings, high data speed, as well as the advantage of having ready customer support through the respective teams of the acquired MSOs - Den, Hathway and GTPL Hathway (in which Reliance Jio acquired controlling stakes in CY2018). The acquisition of pure cable / DTH subscribers may, however, be challenging for Reliance Jio given the former’s low average revenue per user (Rs. 200-250 per month) vis-a-vis a minimum tariff of Rs. 700 of the latter.
Adds Ms. Suneja, “As of March 2019, of the 197 million TV Households (HH), DTH has digitised ~55% of HH. Within this, private players have accounted for 36% and DD Freedish, a subscription-free DTH service owned by the public service broadcaster, has accounted for the balance 15%. Digital cable, on the other hand, digitised around 34% of the total TV HH as of March 2019. The balance 11% is still on analogue mode. Digitisation of cable TV services has required significant capital investments by the industry. Till March 31, 2019, the DTH players[1] have invested ~Rs. 29,500 crore, while the major (top-four) digital cable players have invested ~Rs. 8,400 crore.”
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