Dish TV India Limited Investor Presentation Stock Code: BSE - - - PowerPoint PPT Presentation

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Dish TV India Limited

Investor Presentation

Stock Code: BSE - 532839 NSE- DISHTV LSE: DTVL

Disclaimer

Some of the statements made in this presentation are forward-looking statements and are based on the current beliefs, assumptions, expectations, estimates, objectives and projections of the directors and management of Dish TV India Limited about its business and the industry and markets in which it operates. These forward-looking statements include, without limitation, statements relating to revenues and earnings. The words “believe”, “anticipate”, “expect”, “estimate", "intend”, “project” and similar expressions are also intended to identify forward looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond the control of the Company and are difficult to predict. Consequently, actual results could differ materially from those expressed or forecast in the forward-looking statements as a result of, among other factors, changes in economic and market conditions, changes in the regulatory environment and other business and operational risks. Dish TV India Limited does not undertake to update these forward-looking statements to reflect events or circumstances that may arise after publication.

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Investment rationale

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01 02 03 04 05

Ai Aimin ing g to

• be

be the the lar argest

Poised to be the largest media company in India

Syn ynergies

Significant merger synergies realised. Merged co. to target further synergies

Gr Growt wth

On course to deliver strong growth and margins

Str Stron

• nghol
• ld ma

markets

Buffered from alternate technologies; supremacy in semi-urban and rural areas

Ann Annuit ity bus busin iness

Annuity business with significant Free Cash Flow potential

Poised to be the largest media company in India

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Tot

• tal Re

Revenues (Rs Rs Bn. n.)

Year ending 31 March 2019 79.3 61.7 57.2 51.2 41.0 36.6 31.2 24.6 23.6 16.2 12.1 25 50 75 Zee Entertainment Enterprises Dish TV India Ltd Tata Sky Network 18 Media & Investments Airtel Digital TV Sun TV Network PVR D.B.Corp Jagran Prakashan Hathway Cable & Datacom Den Networks

EB EBITDA (Rs Rs Bn.)

Year ending 31 March 2019 25.6 25.6 20.4 18.2 15.7 6.2 5.0 4.1 3.7 2.1 1.8 (4) 4 12 20 28 Zee Entertainment Enterprises Sun TV Network Dish TV India Ltd Tata Sky Airtel Digital TV PVR D.B.Corp Jagran Prakashan Hathway Cable & Datacom Network18 Media & Investments Den Networks

Source: Annual Report & company filings ; Tata Sky revenue & EBITDA number is for year ending 31 March 2018

Supremacy amongst semi-urban and rural consumers

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DTH - easiest to reach / most economical for TV viewing

Distributed row houses

Growing penetration

• f wireless

broadband Unfeasible to lay fibre/ wired broadband Negligible requirement for wired broadband

Large family size

Inconvenient- watching linear TV on mobile screens

India

• utside

big cities

Di Dish TV V India India has has majo ajority of

• f its

ts sub subscribers outs

• utside top
• p-towns and

and cit ities

7

Indian TV Industry

The Indian TV industry

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Source: TV industry size: FICCI-E&Y 2019; Households: BARC India Universe Update 2018; Distribution Industry: MPA Report 2018; Pay & FTA channels :TRAI Mar 2019 Analog Cable 17% Digital

Cable 48%

Mar arket shar share - Dis Distribution Ind ndustry

DTH 35%

2021 2021

INR INR 551 551 Bn. Bn.

TV subscription revenues CAGR of 9% (2018-2021P) TV Indu ndustry to

• gain

gain fr from

• m

incr increasing TV V and Pay y -TV pen penetration

• n

Broadcas asting Ind ndustry Multiple broadcasters, having 328 pay channels, 574 FTA channels, producing content in more than 15 languages

Total l ho house usehold lds s (i (in n Mn. n.) Total l TV TV ho house usehold lds s (i (in n Mn. n.) TV penetration (of total HH’s) C&S HH’s (in Mn Mn.) .)

2018 018 2020 020

311 m 29 298 m

220 0 m 197 7 m 435 481 551 305 333 403

200 400 600 800 1000 2018 2019P 2021P

TV Industry Size (INR Bn.)

Subscription revenues Advertising revenues

66% 66% 71% 71% 16 163 m 18 185 m

Televisio ion will ll main aintain pole pole pos posit ition as as the lar

argest se

segment wit ithin the In India dian M&E &E se sector

TV viewing HHs - Pay & FTA

TV V hou households 197 Mn. Pay -TV TV 163 Mn. Cab Cable Sub Subs 105 Mn. DTH Su Subs 58 Mn. Non

• n - Pay

34 Mn. Fr Free Di Dish 30 Mn.

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Source: TV & Pay – TV HH: BARC Universe Update 2018; Distribution by platform: MPA Report 2018; Free Dish subscriber base: Prasar Bharti website

20% 33% 17% 14% 16%

TV viewing in India

10

95% 95% 98% 98% 97% 97%

Percentage of single TV households

Source: Percentage of single TV households: BARC ; Daily time spent: FICCI-E&Y 2019

77% large and affluent joint families have single TV’s, implying co-viewing as as a a con

• nsumption pa

pattern

79% of Indian households still have CRT TV’s

All India Urban Rural

Dail Daily tune in in on

• n TV:

566 566 Mn Mn. . Ind ndividuals Avg.daily tim ime spe spent pe per ind individual al 03 03:46 :46:21 (hh hh:mm:ss ss) TV continues to remain the most popular form of entertainment Share of TV viewership universe across age groups

Adults (31-40 yrs)

Kids (2-14 years) Youth (15-30 years) Senior (>50 years)

Popular across age groups despite rising internet penetration

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Source: Share of TV viewership by, and across age groups: BARC; Broadband subscribers : TRAI Dec 2018

1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 51+ yrs 41-50 yrs 31-40 yrs 15-30 yrs 2-14 yrs

2017 2016

22 22% gr growth th

Share of TV viewership universe by age groups (in Mn. impressions)

Con Contrary to

• popu

popular perc percepti tion, the you youth con

• ntrib

ibutes s a a mass assiv ive 33% 33% shar share of

• f TV

V vie viewership, , and and has has se seen a a gro growth th of

• f 22%

22% in n impressio ions ove ver the ye year

Youth (15-30 years) Mature 41-50 years Kids (2-14 years) Senior (>50 years) All India internet penetration- 48%

41 70 120 218 345 507 15 15 17 18 18 18 100 200 300 400 500 600

Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Broadband subscribers (in Mn.) Wireless Broadband Subs (mn) Fixed Broadband(mn)

12 1,439 1,131 1,064 997 103 DirecTV Charter Dish Comcast Netflix Annual cost of Netflix 1/10th of Pay -TV cost in the US Annual ARPU (USD) -2016 80 54 30 11 8 8 11 7 8 6 USA Australia Sweden Mexico Nigeria Low cost of OTT vs Pay -TV drove adoption Pay TV monthly ARPU (USD) OTT monthly fee (USD)

Source: Cost of OTT vs Pay –TV: Digital TV Research; Annual cost of Netflix : Marymaker Internet Trends Report 2017, : Cost of OTT vs Pay –TV: Digital TV Research & internal est.; Pricing of OTT services : Market Estimates

Emergence of OTT

Th The glob

• bal OTT

T phenom

• menon
• n

Th The India exceptio ion

₹ 649 ₹ 233 ₹ 275 Netflix Cable Pack DTH popular packs Pricing (p.m.) of Popular Packages in OTT, cable and DTH in India 80 54 30 11 8 4 8 11 7 8 6 9 USA Australia Sweden Mexico Nigeria India Cost of OTT vs Pay -TV per month (in USD)

Pay TV monthly ARPU (USD) OTT monthly fee (USD)

Lo Low OTT costs compared to to tra radit itio ional l Pay ay -TV pl platf tforms, led to to hi high gher r ad adoptio ion of OTT content gl globall lly Ind ndia ia is s an an exceptio ion to to the e gl global l OTT ph phen enomenon, wi with th hi high gher cos

• st

t of

• f OTT vs

s Pay ay -TV TV

IPTV

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Infr frastructure Af Affor

• rdabili

lity Co Cons nsumer read eadin iness Co Content & & ser ervic ices

Densely populated cities & high-rise housing

High rise

Last mile high speed wired broadband penetration

High speed broadband

Penetration of smart devices (smart TV, laptop etc )

Smart devices IP IPTV - use use of

• f internet to
• de

deli liver TV prog programs and and vid videos s tha hat are are eit ither liv ive or

• r on
• n de

demand to

• hi

high-ris ise hous housin ing and and den densely popu popula lated metro cit cities

Typ ypic ical IP IPTV ecosystem

Hi High spee eed wi wired broa

• adband con
• nnec

ected ed devic ices

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IPTV - Reality check Win inning IP IPTV su subscri

• ribers. Is

Is it it as as eas easy as as ga gain inin ing tel elecom cus ustomers?

Telecom IPTV

Capex requirement Low Front loaded Physical Infrastructure requirement Low High Ground Task force Negligible Huge Overall cost of delivery Low Extremely high per home Distribution/reaching the last mile Through local shops/ retail stores Through existing operators having access to homes Pricing High existing data and voice costs supported aggressive undercutting by new entrant Traditional C&S prices are too low to be susceptible to undercutting Consumer experience/ novelty in

• ffering as compared to existing service

Free voice and cheap data Nil ( change in pipes only) Potential reach of new technology Pan India Densely populated tier 1 cities Potential consumers Data starved & aspiring mobile customers Select consumers having extremely high data requirements

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Global fixed broadband penetration & TV platform take-up

Source: Fixed Broadband penetration : ACT DRHP; Global TV platform take-up : Ofcom International Communications Market Report, 2017

6% 8% 31% 37% 64% 75% 79% 82% 84% 88% 93% 105% 0% 20% 40% 60% 80% 100% 120% India Indonesia Thailand Malaysia China Japan Australia US UK Singapore Hong Kong South Korea

Fixed Broadband penetration as a % of Household

9 8 7 7 6 3 2 1

27 1

19 5 37 61 6 14 69 14 27 31 40 23 44 49 30 46 42 2 24 12 15 42 56 15 10 19 22 12 42

0% 20% 40% 60% 80% 100% US JPN UK AUS GER POL ITA BRA IND

TV platform take-up as proportion of TV homes (%)

IPTV Analogue Terrestrial Digital Terrestrial Analogue Satellite Digital Satellite Analogue Cable Digital Cable

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IPTV as an offering – An oversimplification of market thesis

IP IPTV as as a th thre reat t to DTH – An ove versimplif ification of f market th thes esis is! Ha Have we e see een th this is bef efore?

• Mandatory digitization of analog cable signals (Digital Addressable Systems), started in 2012, was perceived to be a threat to DTH
• DTH had the following advantages over Analog:
• DAS, on the other hand, had the potential to even out all these advantages as follows:

Value proposition DTH DAS

Video Quality Digital Digital Number of channels High High Pick and choose channels Available Available HD channels Available Available

Value proposition DTH Analog

Video Quality Digital Analog Number of channels Higher Lower Pick and choose channels Available Not available HD channels Available Not available

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IPTV as an offering – An oversimplification .. (continued) IP IPTV as as a a thr threat to DTH – An n overs rsimpli lific ication of

• f mar

arket the thesis is

• However, in reality, DTH emerged stronger than ever before post the event:

DTH Supremacy

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Increased capacity & content throughput

VDSP Model Consulting eSolution Web Building Web Design

Extremely efficient, low cost, video delivery platform

Consumption of bandwidth heavy content likely to increase going forward. SD HD UHD

Declining transponder costs – an

• pportunity

Consolidation in cable & implementation

• f the Tariff

Order to ensure a level playing field for DTH

Impact of changes in environment on DTH: mobility/fixed line

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1.70 5.50 0.90

0.16 0.81 0.11

9.5% 14.7% 12.2% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 0.00 1.00 2.00 3.00 4.00 5.00 6.00

Siti Hathway Den

India broadband uptake as % home passed March. 2019 Broadband Homes Passed Broadband Subscribers Uptake as (%) homes passed 828 1,375 4,642 20,092 66.1% 237.6% 332.8%

0.0% 50.0% 100.0% 150.0% 200.0% 250.0% 300.0% 350.0% 5000 10000 15000 20000 25000 Dec -14 Dec -15 Dec -16 Dec -17

Wireless data usage and growth Wireless data usage (in million GB per year) Growth (YoY In %)

Exp Exponential gro growth th in n da data con

• nsumptio

ion on

• n mob
• bil

ile has has re restric icted the ne need for

• r fix

fixed line dat data

Source: Wireless data usage & growth : TRAI yearly performance indicator 2017 ; India broadband uptake as % home passed Mar. 2019: Company filings: Siti broadband uptake data is for December 2018

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Impact of changes in environment on DTH: FTTH Fib Fibre re no not a a ga game cha hang nger! r!

FTTH Value addition to consumer experience

High speed There are no specific applications which need 1Gbps connectivity and till these applications evolve customers would not necessarily jump onto the Very High Speed broadband. Data volume Marginal utility of data is negligible Bundling of data Virtual Data Service Providers or VDSP would be an equally effective substitute to services like FTTH which promise bundled data. Existing last mile service providers like DTH companies would become VDSP’s to

• ffer data benefits to existing subscribers in partnership with their respective mobile service providers on

revenue share basis. A win-win for both! Exponential growth in data consumption on mobile has restricted the need for data through fixed line Price FTTH also requires corresponding ONTs and Routers/ Wi-Fi devices at home, which add significantly to the

• costs. These costs cannot be justified if the applications used do not have a need to use 1000 Mbps. Thus

price to the end consumer would never be lower than wireless data. With ARPU’s at $3 , the DTH industry is not ripe for price disruption. IPTV through FTTH would also not offer any incremental be benefit fit to

• the

the con

• nsumer thu

thus re restric ictin ing scop

• pe for
• r any

y disruptio ion. Glob Global FT FTTH TH adop

• pti

tion tren trends show it t has not

• t been disrup

ruptiv ive in any y of

• f the

the ma mark rkets in US S or

• r EU

EU, nor

• r has it

t gro rown wn at t extraordinary rat rates ha having g run run into

• a

a serie ies of

• f hu

hurdl rdles es.

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Impact of changes in environment on DTH: FTTH Fib Fibre re no not a a ga game cha hang nger r .. .. even en whe hen com

• mpare

red to exis istin ing fix fixed lin line e bro broadband

Gl Global FT FTTH adop adoptio ion trends sho show it t has has not not be been di disruptiv ive in n an any of

• f the mar

arkets s in n US US or

• r EU

EU, , nor nor has has it t gro grown at at ext xtraordinary ry rat rates hav havin ing run run into a a ser series s of

• f hurd

hurdles. s.

3.54 3.50 3.49 3.35 3.24 3.17 2.97 2.60 2.70 2.80 2.90 3.00 3.10 3.20 3.30 3.40 3.50 3.60 7 Star Digital Spectranet Jio Giga fiber Airtel Atria convergence technology You broadband Hathway

Netflix ISP leader board – June 2019

7 Star Digital Spectranet Jio Giga fiber Airtel Atria convergence technology You broadband Hathway

Source: Netflix ISP speed Index, June 2019

Impact of changes in environment on DTH: New Tariff Regime

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Consulting eSolution Web Building Web Design

New New Tarif iff Regulatio ions

Creation of a level playing field vis-a-vis cable Network carriage fees to provide revenue stability

Transparency in content deals

End of irrational carriage fee revenues as carriage gets restricted to niche channels

Pass through of content costs to de-risk the business

Overall margin expansion

6 5 4 3 2 1

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Roadmap

Dish TV India – The Road Ahead

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In In million FY2019 A FY 2020 Est. Growth YoY Est.

Capex

• Rs. 8,500
• Rs. 6,500 – 6,750

Dn 23.5% to 20.6% YoY Net adds 0.7 0.8 Up 14.3% YoY EBITDA

• Rs. 20,443
• Rs. 22,500 - Rs. 23,000

Up 10.1% to 12.5% YoY

Short Term

Dish TV India – The Road Ahead

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Medium Term

FY Y 202 2020-2021 2021 – Well ell po posit sitioned to

• add

ddres ess evolv

• lving vide

ideo nee needs

• Constant increase in content throughput and capacity; strengthening ability to compete
• Technological innovations to enable subscribers to watch content anywhere, anytime
• VDSP – Partnering with telcos and broadband players to offer exciting benefits to consumers
• Emerging as a stronger alternative to bundled offerings

FY Y 2022 2022 – Es Establi lished an and un unrivall lled

• Leveraging the 23.9 million plus subscribers for competing benefits
• Overall margin expansion
• Solid and regular free cash flows

St Stay con

• nnected on
• n the

the go go - WATCHO

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Per ersonali lized TV expe xperi rience eve very rywhere

Consolidation to lead to further value creation

27 Dish TV- Videocon 35% Tata Sky 27% Airtel 24% Sun Direct 13% Reliance 1% Market Share (% of net subscribers)

Source: Market share - TRAI Data, March 2019 [72.44-5.08 mn]

Hig Higher mar arket shar share of

• f the com
• mbin

ined en entity to

• cr

create syn ynergies A com

• mbined entity with

th a a si sign gnificant pres presence acr across ss India India

New customer centric ‘Dish Combos’

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* Exclusive of taxes

Bha harat Combo @ @ Rs Rs. . 14 140* 0* Bha harat Cricket @ @ Rs Rs. . 15 157* 7* Swag agat@ @ Rs Rs. . 223* 223* Sup Super Fam amily @ Rs Rs. . 27 275* 5* Maxi xi Spo Sports s @ Rs Rs. . 32 326* 6* Sup Super Spo Sports @ @ Rs Rs. . 386 386* Hin indi En Entertai ainment HD HD Engl English Cricket HD Telugu HD Marathi HD Tam amil HD HD Engl English Movies s & News HD Bangla HD

Dish HD add- on packs

Rs Rs. . 57* 57* Rs Rs. . 57* 57* Rs Rs. . 70* 70* Rs Rs. . 71* 71* Rs Rs. . 74* 74* Rs Rs. . 76* 76* Rs Rs. . 133* 133* Rs Rs. . 197* 197* All All Hin indi HD

Our core values

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Financials

Quarterly performance metrics

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Net subscriber additions of 209 thousand EBITDA margin – 57.9% Operating revenues INR 9,263 million EBITDA & EBITDA Margin INR 5,360 million 57.9% ARPU INR 116 (Erstwhile ARPU INR 200)

89% 5% 2% 4% Subscription revenues Additional marketing, promotional fee and bandwidth charges Advertisement income Others

Consolidated revenues

5% 20% 5% 12% Programming and other costs Other operating expenses(excl.

• prog. & other costs)

Employee benefit expenses Other expenses (including S&D expenses)

Consolidated expenses

P&L structure – 1Q FY20

Quarter ended Quarter ended INR Million June 2019 June 2018 Operating revenues 9,263 16,556 Expenditure 3,902 10,989 EBITDA 5,360 5,568 EBITDA margin (%) 57.9 33.6 Other income 46 157 Depreciation 3,629 3,608 Finance cost 1,468 1,775 Exceptional items

• Profit / (Loss) before tax

310 342 Tax expense:

• Current Tax
• Current Tax-prior years
• Deferred Tax
• Deferred Tax- prior years

165

• 499
• 104
• (18)
• Net Profit / (Loss) for the period

(354) 255

1QF QFY 2020 2020 vs.

• s. 1QF

1QFY 2019 2019

Operating revenues break-up (Rs. mn) 1QFY 2020

Summarized Consolidated P&L - Quarterly

8,261 423 197 382 Subscription revenues Additional marketing, promotional fee and bandwidth charges Advertisement income Teleport services, CPE & Other

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Owing to the netting off of programming cost from revenues, to better reflect the New Tariff Regime, operating revenues for the quarter are not comparable with the corresponding period last year. Had the Company continued to account for revenues and costs in terms with the erstwhile regime, revenue from operations as per standalone and consolidated results for the quarter ended 30 June 2019 would have been higher by Rs 6,019 mn, operating expenses would have been higher by Rs 6,620 mn and net profits would have been lower by Rs 472 mn.

Annual performance metrics

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Combined subscriber base of 23.7 million EBITDA margin – 33.2% Operating revenues INR 61,661 EBITDA & EBITDA Margin INR 20,443 33.2% ARPU INR 201

92%

2% 2% 4%

Subscription revenues Bandwidth income Advertising income Other income

Consolidated revenues

37% 18% 4% 8% Programming and other costs Other operating expenses(excl.

• prog. & other costs)

Employee benefit expenses Other expenses (including S&D expenses)

Consolidated expenses

P&L structure – FY19

Year ended Year ended INR Million

• Mar. – 2019
• Mar. – 2018

Operating revenues 61,661 46,342 Expenditure 41,218 33,181 EBITDA 20,443 13,160 EBITDA margin (%) 33.2 28.4 Other income 521 542 Depreciation 14,409 10,717 Financial expenses 6,286 3,964

Exceptional items

15,624

• Profit / (Loss) before tax

(15,357) (979) Current Tax Current Tax-prior period Deferred Tax 284 92 (4,099) 53 (30) (166) Deferred Tax- prior period 13 Net Profit / (Loss) for the period (11,634) (849)

FY FY 2019 2019 vs.

• s. FY

FY 2018 2018

Operating revenues break-up (INR Mn.) FY 2019

Summarized Consolidated P&L- Annual

56,638 1,446 1,113 2,464 Subscription revenues Bandwidth charges Advertisement income Teleport services, CPE & Other

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Financials of Dish TV India Limited for the year ended March 31, 2018 represent 12 months financial performance of Dish TV India Limited and 6 months financial performance of Videocon d2h Limited. Financial numbers for FY18 are thus not comparable with FY19. Presuming FY18 financials had represented 12 months each, operating revenues and EBITDA of the Company would have been Rs. 62,377 million and Rs. 19,690 million respectively.

INR Million March 2019 (Audited) Equity and liabilities Equity (a) Equity share capital 1,841 (b) Other equity

53,087

Equity attributable to owners of Holding Company 54,928 (c) Non-controlling interest (346) Liabilities (1) Non-current liabilities (a) Financial liabilities (i) Borrowings

12,393

(ii) Other financial liabilities

• (b) Provisions

273

(c) Other non-current liabilities

363

(2) Current liabilities (a) Financial liabilities (i) Borrowings

6,914

(ii) Trade payables

Total outstanding dues of micro enterprises and small enterprises 22 Total outstanding dues of creditors other than micro & small enterprises 13,877

(iii) Other financial liabilities

14,584

(b) Other current liabilities

7,867

(c) Provisions (d) Current tax liabilities (net) 32,609 227 Total Equity & Liabilities 1,43,711

Consolidated Balance Sheet

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INR Million March 2019 (Audited) Assets (1) Non-current assets (a) Property, plant & equipment

33,489

(b) Capital work in progress

7,666

(c) Goodwill

47,325

(d) Other intangible assets

21,538

(e) Financial assets (i) Investments (ii) Loans

113

(iii) Other financial assets

122

(f) Deferred tax assets (net)

9,993

(g) Current tax assets (net)

1,226

(h) Other non-current assets

1,798

(2) Current assets (a) Inventories

247

(b) Financial assets (i) Investments (ii) Trade receivables (iii) Cash and cash equivalents (iv) Bank balances (v) Loans (vi) Other financial assets (c) Other current assets

• 1,406

927 780 120 10,567 6,396 Total assets 1,43,711

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Thank You