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DEN Networks Limited Disclaimer These presentation materials have - - PowerPoint PPT Presentation

DEN Networks Limited Disclaimer These presentation materials have been prepared by DEN Networks Limited (DEN) solely for use at this presentation and have not been independently verified. This presentation material is highly confidential, is


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DEN Networks Limited

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Disclaimer

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These presentation materials have been prepared by DEN Networks Limited (“DEN”) solely for use at this presentation and have not been independently verified. This presentation material is highly confidential, is being presented solely for your information and may not be copied, reproduced or redistributed to any other person in any manner. The distribution of these materials in certain jurisdictions may be restricted by law and persons into whose possession these materials come should inform themselves about and observe any such restrictions. Neither DEN nor any of its affiliates, advisers or representatives make any undertaking to update any such information subsequent to the date

  • hereof. No representations or warranties, express or implied, are made as to, and no reliance should be placed on, the accuracy, fairness or

completeness of the information presented or contained in this presentation. The information presented or contained in this presentation is current as of the date hereof and is subject to change without notice. Certain information and statements made in this presentation contain “forward-looking statements.” Such forward-looking statements can be identified by the use of forward-looking terminology such as “anticipate,” “believe,” “considering,” “depends,” “estimate,” “expect,” “intend,” “plan,” “planning,” “planned,” “project,” “trend,” and similar expressions. All forward-looking statements are the current expectation of future events and are subject to a number of factors that could cause actual results to differ materially from those described in the forward-looking statements. This presentation should not be construed as legal, tax, investment or other advice. Caution should be taken with respect to such statements and you should not place undue reliance on any such forward-looking statements. Certain data in this presentation was obtained from various external data sources, and DEN has not verified such data with independent sources. Accordingly, DEN does not make representations as to, and assumes no responsibility or liability for, the accuracy or completeness of that data, and such data involves risks and uncertainties and is subject to change based on various factors. This presentation has not been reviewed or approved by any regulatory authority in India or otherwise, and does not constitute an offer or invitation to purchase or subscribe for any securities of the Company and neither any part of this presentation nor any information or statement contained therein shall form the basis of or be relied upon in connection with any offer, investment, solicitation, contract or commitment whatsoever. You acknowledge that you will be solely responsible for your own assessment of the market and the market position of the Company and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of the business of the

  • Company. None of the Company’s securities may be offered or sold in the United States without registration under the U.S. Securities Act of 1933,

as amended, or pursuant to an exemption from registration therefrom.

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Contents

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DEN’s Strategy

Digitisation in Indian Cable

DEN Networks – An Overview Financials

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The Indian Television Market – A Snapshot

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Current Indian TV Market Cable & DTH: Household Break-up

Total Households TV Households

162 mn

Cable Homes 98 mn DTH subscribers (Gross) 46 mn

262 mn

Total Cable & DTH Households

144 mn

Source: MPA Estimates (MPA Asia Pacific Pay-TV & Broadband Markets, 2012) Forecasted market size for 2013

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Phase 1

Deadline: Oct 31, 2012

Phase 2

Deadline: Mar 31, 2013

Phase 3

Deadline: Sep 30, 2014

Phase 4

Deadline: Dec 31, 2014

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The Indian Cable Digitisation Law:

A Four Phase Conversion of Analog to Digital

4 Metros

Delhi, Mumbai, Kolkata, Chennai

38 1 Million+ Population Cities All Other Urban Areas Rest of India

Phase 1 & 2 Covers India’s Largest Cities

* Note: Forecasted cable TV homes for 2015. Assumed to by fully digitised (Source: MPA Asia Pacific Pay-TV & Broadband Markets 2012)

The Indian Cable Market in 2015

Digital Cable subscribers*: 101 mn

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Phase 2: Pace of Digitisation – Cable vs DTH

Cable Dominates Digital Conversions

DTH (subs added) Cable (STBs installed) 470,000 5.28 mn

Note: Figures – approximate to nearest 10,000. Source: Derived from Ministry of Information & Broadcasting, Govt. of India data available on pib.nic.in and www.digitalindiamib.com

Cable digitised at >11x the pace of DTH during the last 2 months

Phase 2 - Digitisation in 38 Cities

(Feb 8 – April 12, 2013)

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Phase 1: Pace of Digitisation – Cable vs DTH

Similar Trends were Observed in Phase 1

DTH (subs added) Cable (STBs installed) 171,000 1.75 mn

* Excludes Chennai as national MSOs are absent in the city. Note: Figures – approximate to nearest 10,000. Source: Derived from Ministry of Information & Broadcasting, Govt. of India data available on pib.nic.in and www.digitalindiamib.com

Cable digitised at 10x the pace of DTH in the last 45 days before the deadline

Phase 1 Cities – Digitisation in 3 Metros*

(Delhi, Mumbai & Kolkata) Sep 17 - Nov 1, 2012

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Phase

Total Digital Cable & DTH STBs Seeded DTH Subscribers Digital Cable STBs installed Digital Cable Market Share (%)* Phase 1** 8.7 mn 2.2 mn 6.5 mn 75%

Phase 2

13.6 mn 4.4 mn 9.2 mn 68%

Total

22.3 mn 6.6 mn 15.7 mn 70%

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Government Data on Digitisation in Phase 1 & 2 Cities

* Digital cable market share = Digital cable STBs ÷ Sum of Digital Cable & DTH subscribers ** Phase 1 data corresponds to Delhi, Mumbai & Kolkata. Excludes Chennai as national MSOs are absent in the city Source: Phase 1 data as per MIB Press Release (Nov 1, 2012); Phase 2 data as per MIB Press Release (April 12, 2013)

Cable & DTH in Phase 1 & 2 Cities

Cable Becomes Largest Digital Platform

  • Approx. 3 mn cable

homes yet to be digitised in Phase 2

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How Digitisation is Set to Transform Indian Cable…

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All Consumers Paying

All Cable TV consumers paying the last mile operator (LCO)

  • ARPUs in the range of $3-$4(a)
  • Digitisation targets 100% transparency of sub. base by LCO
  • Government – Higher tax revenues
  • MSOs & Broadcasters – Legitimate share of subscription
  • LCOs – Medium to Long Term Gains

‒ From transparency of multiple TVs ‒ Higher ARPUs from more channels ‒ Share in VAS (VOD/ PPV) & Broadband revenues

Stage Set for Transformation

  • More Channels
  • ARPU Growth
  • Broadband & Triple Play
  • Consolidation in Cable

India’s Cable TV Industry Likely to Resemble Mature Markets Like the US All Stakeholders Stand to Gain

(a) Source: MPA Asia Pacific Pay-TV & Broadband Markets 2012

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…Early Signs of That Transformation Already Evident

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New Channel Launches DTH platforms taking up their entry pack pricing:

  • July 2012:

Rs 180  Rs 200

  • March 2013:

Rs 200  Rs 220 ARPUs Rising MSOs’ current packaging and pricing already indicating a rise in ARPUs

  • Star Sports 2, Ten Golf
  • HBO Hits & HBO Defined (Ad-free pay channels)

New channels, including niche & subscription

  • nly channels being launched:

Early Indicators of Digitisation Driven Transformation

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Contents

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DEN’s Strategy Digitisation in Indian Cable

DEN Networks – An Overview

Financials

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DEN: Leader in Indian Cable

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Pan-India presence in 11 million analog homes; Digital base of 4.1mn Strategic Content J-V – exclusive distributor of all Star, Zee & Other channels in India EBITDA positive in 1st full year of operations; PAT positive for 3 years in a row

India’s Largest* Cable Distribution Company Star DEN & MediaPro Strategic J-V With Star & Zee Strong Financials

* As per MPA Asia Pacific Pay-TV & Broadband Markets 2012 in terms of subscribers

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Pan-India Presence in Important States & Cities

13 Delhi Mumbai

Bangalore Mysore

Kolkata

Strong Nationwide Presence in 150+ Cities across 13 States

  • 3 Metros
  • 24 One mn+ cities
  • 123+ Other cities &

towns

DEN’s Presence Spans India’s Economically Important Urban Landscape

Metros 1 Million+ Cities Other DEN Cities DEN States

Map not to scale

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6 DTH Platforms

DEN – Digitisation in Phase 1 Cities

DEN Alone Rivals All DTH Platforms Put Together Delhi Mumbai Kolkata

300,000 300,000 + ~ 320,000 ~ 753,000 1.02 million

2.0 Million 2.1 million Total 

STBs Installed/ Subscribers

Note: DTH data is as of Oct 30, 2012 (Ministry of Information & Broadcasting, Press Release dated Oct 31, 2012) DEN data corresponds to STBs installed, as of March 2013

1.4 million+

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June 6 2012 October 29 2012 April 5 2013

DEN: Rapid Digital Scale Up Driven by DAS

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DEN Digital Base

(STBs installed in millions)

Over 2 mn conversions in 158 days 1 mn conversions in 145 days

1 Million 2 Million 4.1 Million

DAS: Digital Addressable Systems

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State Cities Estimated Seeding in Phase 2

Uttar Pradesh Karnataka Rajasthan Gujarat Maharashtra Others

7 2 3 2 6 4 1.3 mn 0.3 mn 0.3 mn 0.2 mn 0.6 mn 0.3 mn Total

3.0 mn

DEN – Phase 2 Cities Digitisation in Full Swing

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2.0 million STBs already deployed in Phase 2 cities

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STBs: Set top Boxes

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4 million

DEN – Phase 3 & 4 Cities

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Significant Scope to Increase Subscribers Through Further Consolidation

Uttar Pradesh Karnataka Rajasthan Gujarat Maharashtra Bihar Haryana West Bengal Kerala Madhya Pradesh Jharkhand Uttarakhand

Phases 3 & 4: DEN Presence Spans 120 + Cities Across 13 States... Phase 3 2 million Phase 4

  • Est. Subscriber Base

Phase 3 + 4 = 6 million

NCR of Delhi

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MediaPro: Exclusive Distribution J-V for all Star, Zee, Turner & NDTV Channels

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50% 50%

DEN is the Only Major Cable TV Company in India to have a Strategic Stake in a Large Pay Channel Distribution Entity

DEN holds an effective stake of 25% in MediaPro

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MediaPro: A Content Distribution Powerhouse

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FOX NatGeo Others Star

Unrivalled Collection of 70+ Leading Television Brands Under One Roof

NDTV Zee Turner

List of channels not exhaustive

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Contents

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DEN’s Strategy

Digitisation in Indian Cable DEN Networks – An Overview Financials

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DEN: Strategy Growth with Digitisation

Digitisation Broadband Consolidation Digitisation of Current Analog Subscriber Base Consolidate Fragmented Cable Players and Digitise Launch and Scale up Broadband Service

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Growth Verticals Over the Next 2-3 Years

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Cable: Large Consolidation Opportunity in Phase 3 & 4 Cities

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Source: Derived from Indian Cable Industry – A Digital Evolution, January 2013 report and MPA Asia Pacific Pay-TV & Broadband Markets 2012

50% 50% Top 6 players Others Indian Cable Market (Market Shares %) Small, Independent MSOs, mainly in Phase 3 & 4 Towns Who Control nearly 50% of the Market – Not in a Position to Digitise... ...These markets ripe for expansion through organic & inorganic routes while Digitisation is playing out

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Broadband: The Next Wave of Growth in Cable

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Source: Forecasted cable TV homes for 2013 (MPA Asia Pacific Pay-TV & Broadband Markets, 2012) TRAI Recommendation Paper on National Broadband Plan, Dec 2010

Unrivalled Last-Mile Presence High Bandwidth Platform .

DEN’s Strong Presence Across India’s Urban, Affluent Landscape Offers a Great Opportunity to Become One of the Largest Wired Broadband Platforms Following DAS

98 million Indian homes on cable Other wired platforms (fixed phones)  limited last mile presence 78 mn broadband connections after completion of DAS (TRAI) Broadband through the existing cable last mile

Existing backbone & last mile network with some upgrades can offer DOCSIS enabled broadband

Cable’s Inherent Strengths Likely to Make it One of the Largest Broadband Platforms…

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Contents

DEN’s Strategy Digitisation in Indian Cable DEN Networks – An Overview

Financials

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Strong financials

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(a) Includes other non-operating income; (b) Calculated as Profit before tax plus finance cost plus depreciation; (c) PAT after minority interest ; (d) Does not include minority interest; (e) Calculated as long term borrowings plus short term borrowings plus current portion of long term debt ; (f) From 1 April 2012, Media Pro Enterprises, a indirect JV of DEN, in its standalone financial results has started reporting Net revenues (Gross revenues less cost of distribution right), hence the prior periods are not comparable; (g) Total long term borrowings + Short term Borrowings as per balance sheet as of December 31, 2012; Note: Period ending December 2012 financials are limited reviewed and are provisional

9,256 10,581 11,566 6,588 FY10 FY11 FY12 9MFY13 962 1,264 1,093 1,501 FY10 FY11 FY12 9MFY13 301 375 143 429 FY10 FY11 FY12 9MFY13 7,410 7,746 8,046 8,554 Mar-10 Mar-11 Mar-12 Dec-12 1,750 1,573 2,582 4,362 Mar-10 Mar-11 Mar-12 Dec-12 – 1.5x growth in revenues in just 2 years EBITDA positive in 1st full year of

  • peration; PAT positive in 2nd year

– India’s only listed PAT positive cable

  • r DTH company

– Low debt & debt-equity ratio as on December 2012 Total Income (INR mn)(a)(f) EBITDA (INR mn)(b)(f) PAT (INR mn)(c) Shareholder’s equity (INR mn)(d) Total debt (INR mn)(e)

(g)