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Subscriber additions boost Dish TV stock

Subscriber additions boost Dish TV stock
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First Published: Thu, Mar 24 2011. 11 24 PM IST
Updated: Thu, Mar 24 2011. 11 24 PM IST
Dish TV India Ltd’s stock shot up by 4% on Thursday to Rs66 on a day when the Sensex index of the Bombay Stock Exchange rose by 0.8%.
In an interview to CNBC-TV18 news channel, Salil Kapoor, chief operating officer of Dish TV, has said that the firm should have 1.1 million-plus subscribers in the current quarter. The company had revised guidance to three million subscribers from 2.5 million earlier, but is now expecting to end the year with more than 3.5 million gross additions. That seems to have triggered the increase in the share price. Dish TV had added 1.1 million subscribers in the December quarter as well.
In an another marginally positive development, the Rajasthan government has waived the 10% entertainment tax on direct-to-home (DTH) companies in the state. The DTH industry is reeling under the burden of double taxation—service tax of 10% at the Central level and the entertainment tax in the states. Entertainment tax varies from state to state.
Nevertheless, the Rajasthan tax waiver is not expected to have a substantial impact on Dish TV, as the state accounts for only a small portion of the company’s business. However, it’s a progressive step.
The implementation of the goods and services tax (GST) is also expected to benefit DTH companies. “DTH industry will benefit as it will subsume the service tax, custom duty and entertainment tax into one single goods and service tax, bringing down the tax incidence of about 20-25% imposed currently to 16% proposed by GST,” analysts from Antique Stock Broking Ltd wrote in a note on Thursday.
Dish TV is expecting to exit the current fiscal with an average revenue per user (Arpu) of Rs155 per month. Arpu in the December quarter stood at Rs142 a month, up from Rs139 seen in the September quarter. The Indian Premier League cricket tournament in the June quarter and other sports events are expected to boost subscriber additions.
To be sure, it’s a highly competitive space and that’s a key concern. Dish TV’s stock has had a fantastic run since the beginning of the fiscal that ends on 31 March. That could limit upsides in the near term.
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First Published: Thu, Mar 24 2011. 11 24 PM IST