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Monday, September 14, 2020

DTH revenues may touch Rs 22,000 crore in FY21: Crisil


 Direct-to-home (DTH) broadcasting, which accounts for 37% of total television subscribers in India, is set to notch up a revenue growth of 400-600 basis points (bps) to touch ₹22,000 crore (USD 3 Bn) this fiscal, according to a report by global analytics company Crisil. With people spending more time at home than earlier, TV households will continue to grow as well. Over the past decade, TV penetration in India improved 1,000 bps, but was still 69% in fiscal 2020, indicating potential for further increase.

The industry’s credit outlook is also positive as cash accruals improve despite sizeable capital expenditure. The forecast is based on an analysis of Crisil-rated DTH companies, which account for over 95% of the industry’s revenue. DTH is expanding its share of the total TV pie as cable TV loses viewers. It was 34% in FY19 and 37% in FY20.

“Last year, the DTH sector saw a healthy revenue growth of 1,400 bps (900 bps rise in subscriber base and 500 bps in average revenue per user). This fiscal, the subscriber base is seen increasing another 600-700 bps to 68 million, which will lift revenue growth up 400-600 bps," Sachin Gupta, senior director, Crisil Ratings, said in a statement.

Last year, the DTH subscriber base had increased as cable TV subscribers shifted after implementation of the Trai’s new tariff order, according to the report. While cable TV operators were grappling with integration and roll-out challenges, DTH peers transitioned smoothly as they already had better systems. Besides, pricing parity required as per new regulations meant a 30-35% increase in cable TV tariffs, which eroded the price advantage cable TV enjoyed over DTH. The trend is expected to continue this fiscal, too, aided by the pandemic.

Besides, gradual resumption of the airing of new TV serial episodes and major sporting events such as Indian Premier League being telecast during the festival season, should keep viewers hooked. Though the buzz around over-the-top (OTT) streaming platforms has been getting louder, in the medium-term, the segment does not pose much of a challenge to TV, the report says, given that in India, TV subscription costs less than half of OTT services. Besides, India lags other countries in terms of high-speed infrastructure, which is needed for a good OTT viewing experience. India’s wireline broadband penetration (as a percentage of total household) is currently less than 8% compared with over 80% in the developed countries.

“The increasing popularity and rapid proliferation of OTT platforms is a cause for concern for TV segment," Nitesh Jain, director, Crisil Ratings said in a statement. He added that TV will continue to hold sway over the medium term for three reasons: conducive demographics, low penetration, and, most importantly, low cost.

“OTT will become a material threat only when its cost becomes equal to, or cheaper than, TV subscription, and internet connectivity improves to ensure consistently comparable quality of viewing experience," Jain said.

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