Subhash Chandra-owned Essel Group’s – Dish TV – seems to be gearing up for life post digitisation.
The country’s largest direct-to-home (DTH) television content provider has triggered a price war for the DTH bound subscribers in the four metros – Delhi, Mumbai, Kolkata and Chennai – that have to mandatorily buy a digital set top box (STB) for cable TV from November 1 onwards.
In this “dish-tisation” drive, as the company calls it, the customers who opt for this offer will be eligible to receive a basic channel tier comprising of 70 channels free of cost for life. “Viewers availing this offer will have to remain active by subscribing to a regular package at least twice during a year,” a company release said.
Recently, the government hiked the foreign direct investment (FDI) limit to 74 per cent in the broadcasting space (from 49 per cent earlier). This will be applicable to broadcast carriage services providers, including direct-to-home (DTH) and multi-service operators (MSOs).
But, what is digitisation?
Simply put, digitisation means that all cable TV households would receive digital TV signals through a STB instead of analogue signals. In December 2011, the Parliament enacted a Bill to make digitisation of cable television mandatory in India, starting with the four metros - Delhi, Mumbai, Kolkata and Chennai on or before October 31, 2012 and pan-India by 2014.
Impact
"This latest move by Dish TV will offer current analog subscribers a cheaper digital alternative to cable set top boxes. As the price of the package is an important parameter in a subscriber’s decision to choose between DTH and digital cable, we feel this offer will give an edge to Dish TV in acquiring subscribers at the bottom of the pyramid," states a note from Edelweiss Research.
"We do not expect any significant pressure on ARPU since most Indian viewers are habituated to watching pay channels. At CMP, the stock is trading at EV/EBITDA of 14.5x and 10.6x FY13E and FY14E, respectively. We maintain ‘BUY’ and assign ‘Sector Performer’ rating," it adds.
“This move is on the fallback of the digitisation that will be applicable post November 01. Given the fact that it is one of the largest play in the DTH segment, the move is seen as a step to increase the customer base. Today’s fall of over 2 per cent can be used to buy the stock,” says Gaurang Shah, assistant vice president, Geojit BNP Paribas Financial Services.
“In terms of overall performance, if you compare with the last quarter numbers with what the company will announce, the performance in this quarter will be subdued. However, all the negatives have been priced in. Use the decline to buy for a target of Rs 88,” he adds.
On the digitisation front, Shobhit Khare, an analyst with Motilal Oswal in his latest report dated 10 October states, “While digitisation remains a 'game changer' event for TV broadcasting / distribution sector, we believe valuations are largely full. This leaves little margin of safety in case of any disappointments.”
Adds Ravi Nathani, technical analyst, Nsetoday.com, "The overall trend is bullish. Whereas stock is a buy on dips with a stoploss of close below Rs 75, in the medium-term the stock can touch Rs 90 - 95."
So, are you also inclined to use the correction to accumulate this counter? Kiya aap par bhi Dish sawar hai?
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