Dish TV: subscriber additions get a zing
A product called 'Zing', aimed at customers interested in regional content, helped add subscribers in June quarter
It’s been a painfully slow journey for the Dish TV India Ltd stock for the last one year. The company’s shares currently trade at ₹ 59 and a year back they were at ₹ 57. In 2014, the shares have underperformed the S&P BSE 200 index.
Will the June quarter financial results reverse that trend? The company’s latest results do suggest that sentiment will improve. Dish TV added 332,000 net subscribers in the June quarter, much higher than 226,000 net subscriber addition in the March quarter. One reason for higher subscriber additions in the June quarter was on account of a product called “Zing" aimed at customers interested in regional content. “Dish TV India continued to expand ‘Zing’, our innovative offering for vernacular content across regional markets," said the company’s earnings release. According to an analyst, industry growth has revived and the company has improved its market share over a period of time boosting subscriber additions.
Further, Dish TV took a price hike of 5-7% across some pack categories, which helped its average revenue per user (Arpu), which came in at ₹ 170. The company had maintained its FY14 Arpu was ₹ 170 while releasing its March quarter earnings. But last year’s Arpu was positively influenced by some accounting changes.
Dish TV’s reported revenues for the June quarter declined by 1% on a year-on-year (y-o-y) basis to ₹ 640.7 crore. Note that last year’s June quarter revenue includes a portion of revenue pertaining to financial year 2012-2013 due to an accounting policy change. Adjusting for that, revenue has grown by about 11% on a y-o-y basis, said R.C. Venkateish, chief executive, Dish TV. However, the company continues to post losses at the profit before tax (PBT) level despite having a very decent operating profit margin of 24.5% last quarter. For the June quarter, Dish TV posted a loss of ₹ 16 crore at the PBT level.
Analysts, of course, don’t seem to be worried about that citing that the company is in an investment phase and the gestation process for this kind of business is long. Nevertheless, while the June quarter results show an improvement in the scenario, investors would do well to follow subscriber additions and Arpu in the days to come. That will determine whether the Dish TV stock will live up to the hopes placed on it by analysts.
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