New Delhi: Airtel Digital TV, which began offering direct-to-home (DTH) services in October, is building up its subscriber base by targeting viewers outside the big cities that provide the bulk of customers for market-leading rivals such as Dish TV and Tata Sky.
Graphics: Sandeep Bhatnagar / Mint
“Most of the business has started to come from very rural and semi-urban areas,” said Ajay Puri, director and chief executive, DTH, at Bharti Airtel Ltd. “The top 100 cities contribute to only 30% of our revenues.”
Airtel Digital TV had about 1 million of the total 15 million net installed DTH subscribers as of July, according to media research firm Media Partners Asia (MPA).
The company, likely to add a net 1.4 million new DTH subscribers by December, according to MPA, is going against the conventional wisdom of seeking to convert customers of cable TV services in the larger urban agglomerations.
“We think the DTH market is far beyond cable,” Puri said. While “there are 80 million cable households, there are another 50 million without cable. That’s a ready-made market waiting for DTH”.
Airtel’s plan aims to take advantage of the reach of its phone services, said Farokh Balsara, partner, advisory services, Ernst and Young India Pvt. Ltd. Bharti Airtel is India’s biggest telecom company, with 105 million users as of 31 July, according to the Cellular Operators’ Association of India (COAI).
“It makes sense for them to start from the semi-urban and rural areas given their reach in these places through their telecom business,” Balsara said. “Since there is no cost of laying cables or other capital-intensive infrastructure, they have an edge over traditional cable networks.”
Airtel can take advantage of markets where people have disposable incomes, without the entertainment options available in the big cities.
“You will be surprised how much people in semi-urban and rural areas are willing to spend,” Balsara said. “The idea for them right now is to get as many subscribers as possible on their network. With incumbent players dominating the urban markets, it makes sense.”
Puri agrees that Airtel’s target is to maximize customers.
“We have got our network, our own transponders, our own brand, our own set-up, so we are here to take the share that is due to us,” he said.
Market leader Dish TV, set up by Zee Entertainment Enterprises Ltd, was the first private company to start DTH operations in India in 2005. At the time, the company had to avoid the big cities because it didn’t have all the popular channels on its platform.
Dish TV had no option but to launch in the semi-urban and rural areas, said chief operating officer Salil Kapoor.
“We did not have Star and Sony content so it did not make sense for us to launch in urban areas,” Kapoor said. “Therefore we targeted cable-dry areas.”