Some Excerpts from the above link:
"Industry Status
… is expected to grow at a CAGR of 17% over 2011-16, to reach Rs 73500 crore in 2016. The share of subscription to the total industry revenue is expected to increase from 65% in 2011 to 69% in 2016. The TV industry continues to have headroom for further growth as television penetration in India is still at approximately 60% of total households.
The move towards Digital Addressable Systems (DAS) is expected to bring a sharp change in market dynamics of the industry. Digitization would drive the much-needed structural change in the Indian broadcasting distribution, enabling fair monetization of content and equitable distribution of pay revenue. Incumbent broadcasters would be the key beneficiaries of effective implementation of digitization, since it would drive pay revenue, enhance entry barriers, and reduce carriage cost, followed by MSOs. Also, Digitization would erode the longstanding advantage of cable arising from tax evasion and underpayment for content. Consequently, higher cable tariffs would provide pricing flexibility to DTH operators.
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However, the phase II digitalization has started. The phase II covering 38 cities across 14 states with 1 million plus population is the most important phase of digitization. Implementation of Phase II involves far more practical challenges compared with the Phase I. Phase II envisages digitization of ~23m subscribers compared with 8-10m in phase I. The government has mandated digitization deadlines as follows: â Phase I by end-October 2012. â Phase II about 38 cities by March 31, 2013. â Phase III all other urban area by end-September 2014. â Phase IV rest of India by end-December 2014.
Post successful implementation of digitization, broadcasters are set to gain on both the revenue front as well as the cost front. On revenue front, better subscriber addressability will lead to substantial increase in subscription revenues. At the same time, carriage and placement fees are expected to reduce as the channel carrying capacity in the cable network will increase. Besides, higher subscription revenues would help in reducing dependence upon advertizing revenues, which is more cyclical in nature. For mature broadcasters with large and established networks, the benefits of subscription revenues are expected to flow through the bottom-line without additional costs"
Other Developments
Bharat Business Channel, direct to home TV arm of Videocon Group, has received approval from market regulator SEBI for its proposed Rs 700 crore initial public offering. This will be second DTH company after Dish TV, which will be listed on exchange. The proposed IPO would comprise at least 25% of equity capital, giving a valuation of Rs 2800 crore to Bharat Business Channel. The company plans to use the funds for acquisition of set-top boxes, outdoor units and accessories thereof, repayment/prepayment of certain indebtedness and general corporate purposes."
Union Budget 2013-14
The impact of the Union Budget on MSO players is negative. Instead of MSO player’s demand of reduction or elimination of custom duty on Set Top Boxes, the Finance Minister has doubled it from 5% to 10%. As a result, there will be rise in Set Top Boxes prices. This may impact the process of digitalization and may future delay the entire India’s digitization process beyond December 2014. As per industry estimates, the total capex to be incurred over the four phases of digitization is estimated to be USD 5-8 billion, with the MSOs responsible for most of it.
Outlook
Digitization of cable-TV networks is expected to raise end-user ARPU as well as increase the share of broadcasters. After a couple of decades of paltry increases, growth in Indian pay TV ARPUs is likely to accelerate. A meaningful improvement in ARPU hinges on tariff hikes. Digitization is likely to drive step jump in subscription revenue of large incumbent networks allowing them to increase investments in existing and new channels.
