Dish TV India Ltd announced its March quarter results after markets closed on Wednesday, but investors perhaps had an inkling that profits will be below estimates. The direct-to-home (DTH) company’s share price fell about 4.5% on the National Stock Exchange. As it turns out, fourth-quarter profit was substantially below expectations. In fact, the company eked out a consolidated net loss of Rs28 crore when the Street was expecting it to report a profit of more than Rs20 crore.

What gives? Well, revenue was far lower than expectations. Subscription revenues for the March quarter fell 11% compared to the same period last year to Rs620 crore. Dish TV explains that was mainly owing to the absence of a major cricketing event as well as package downgrades by existing subscribers. Demonetization had impacted the company’s new subscriber additions for the December quarter. The adverse effects of demonetization lingered on during the March quarter as well.

Net subscriber additions for the March quarter stood at 165,000 compared to 204,000 for the December quarter. But the big disappointment came from average revenue per user (Arpu) performance. Analysts reckon Dish TV’s Arpu for the March quarter stood at about Rs140, much lower than Rs152 in the December quarter.

But this saga doesn’t end there. Higher operating expenses took a toll on operating profit performance. Higher transponder cost, due to additional capacity acquired during the March quarter, resulted in an increase in costs of goods sold. Further, mark-to-market losses, due to foreign exchange fluctuations, led to higher other expenses. The upshot: Ebitda margin declined 574 basis points year-on-year to 26.9%. Expectations were much higher. For instance: Kotak Institutional Equities was expecting an Ebitda margin of 32.8%. Ebitda is short for earnings before interest, tax, depreciation and amortization. A basis point is 0.01%.

For fiscal year 2018, Dish TV maintains revenue growth is largely going to be a function of subscriber additions and Phase 4 of digitization should have a material role to play in that. The firm intends to add 1.1-1.2 million subscribers on a net basis this year and is looking at 9-11% revenue growth.

For investors, Arpu improvement will be a parameter to watch. From a long-term perspective, the company is expected to benefit from cost synergies that would result from the Dish-Videocon DTH merger. The Dish TV stock has appreciated 7.7% so far this calendar year versus 14% increase in the Nifty 50 index.