Dish TV India Limited Investor Presentation Disclaimer Some of the - - PowerPoint PPT Presentation

Dish TV India Limited

Investor Presentation

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.

Disclaimer

2

INR 733 Bn

TV subscription revenue

INR 407 Bn

TV subscription revenue

66%

TV penetration (of total HHs)

64%

C&S penetration (of TV HHS)

Indian M&E Industry Snapshot

2016 2020

239 284 306 141 181 202 113 152 173 2010 2016P 2020P Total HHs TV HHs C&S HHs Indian television market statistics (HHs mn.)

Source: TV industry size: FICCI-KPMG 2016, Indian television market statistics & broadcasting and distribution industry : MPA Report 2016

2016 2020

Total households

84% 85%

CAGR of ~ 15.8% (2016-2020P)

306 Mn 284 Mn

Total TV households

202 Mn 181 Mn

Distribution industry

DTH 33%

Analog Cable 38%

Digital Cable 29%

Broadcasting industry

Mu Multiple br broad

• adcasters

producing content in 15 langu guages across 7 7 genres beaming ~8 ~800 chan hannels

3

194 407 733 103 210 365 2010 2016P 2020P TV industry size (INR bn.) Subscription revenues Advertising revenue

Distribution Industry

4

Digital Addressable Systems - DAS

Source: MPA Report 2016

Phas hase I Delhi, Mumbai, Calcutta & Chennai 30-June-2012 Phas hase II II 38 notified cities 31-Mar-2013

Cable

• Land grab seeding at throw away prices
• No addressability/KYC
• Working backwards to fill critical gaps; packaging-billing-

dunning

DTH

• Seeding ground for High-Definition
• Potential subscribers for upselling – high value packs
• Bulk of the potential DAS converts
• Limited coverage by large MSOs due to dispersed population
• Very high DTH recognition
• DTH best suited considering terrain
• Key target markets with more than 60% incremental potential for DTH

5

Phas hase IV IV Rest of India 31-Dec-2016 Phas hase III III 7,709 urban areas 31-Dec-2015

• Stayed by multiple High Courts
• No analog switch -off on sunset date
• No spike in demand around deadline
• Traction seen post deadline due to industry push

Phas Phase III

Distribution Industry - Cable

• Analog signal - limited carrying capacity,

broadcasters jostling for PCS

• Placement & Carriage fees - bulk of MSOs top-

line

• Massive under declaration – ignored to maintain

MSOs ‘reach.’ Reason behind LCOs prosperity No incentive to raise ARPUs

• Digital signal - fatter pipe, larger carrying capacity
• Placement fees mindset
• B2B Net billing
• 100% postpaid. Element of bad debts?
• Impairment of Set-Top-Box (STB)?
• Rising content cost / content negotiation bottlenecks

3 3 Tie iered St Structure MSOs

(more than 115 )

Distributors

(at least 1 in each locality)

LCOs

(more than 50,000)

Pre-DAS Post-DAS

6

Dish TV: Industry pioneer. Started

• perations in 2003. Part of

the ‘Zee’ stable, largest producer and aggregator of Hindi programming in the world TATA Sky: Launched in 2006. JV between the TATA Group and News Corp Sun Direct: Launched in 2007. JV between Sun Network and Astro, Malaysia Relia liance Digit ital: l: Part of Reliance Communication Ltd, a subsidiary of Reliance ADA group Air irtel l Digit ital: l: Launched in 2008. Part of the telecom major Bharti Airtel. Videocon D2h 2h: Launched in 2009. Part of the white goods manufacturing Videocon group

Distribution Industry - DTH

2003 2006 2007 2008 2009 100% digital Owns last mile subscribers Subscription driven top-line Fully prepaid subscription; no bad debts DTH contributes ~ 60% of the broadcaster’s domestic subscription revenue; scope for rationalization vs. cable (non-discrimination) Heavily taxed:

• License fees – 8% AGR instead of 10%

GR (TRAI recommendations on issues related to new DTH licenses – July`14)

• Entertainment tax & Service tax - to be

subsumed post rollout of GST Tax compliant 2008

7

DTH Players in India

8

Many Firsts To Its Credit

9

2007

2009 2009 2010 2010

2012 2012 2012 2012

2013 2013

2014 2014

2015 2015

2003

2015 2015

First DTH in India First to negotiate content on a fixed fee basis First to launch Live TV for moving vehicles First to achieve operational break-even in the Indian DTH industry First to launch High Definition First to offer unlimited recording First to be FCF positive in the Indian DTH industry First to launch

• nline TV for DTH

viewers – ‘Dish Online First to launch a sub- brand targeting regional language markets– ‘Zing’ First to be PAT positive in the Indian DTH industry First to launch Home Video System–DishFlix

92% 3% 3% 1%1% Subscription revenues Bandwidth income Advertising income Lease rent Other income

Consolidated revenues

4% 28% 5% 15% 9% 5% Employee benefit expenses Programming and other cost Transponder lease Other operating costs Selling and distribution expenses Other expenses

Consolidated expenses

100% prepaid Upfront subsidy on consumer premises equipment (CPE) Average ARPU of Rs. 165* Churn at 0.7% p.m. Implied average subscriber life of 12 years

Di Dish TV TV Indi ndia Li Limi mited

Business Model

10

P&L structure – FY16 EBI EBITDA mar argin - 33 33.5% .5%

Note: * 1QFY17 ARPU is post netting-off of entertainment tax. ARPU however would have been Rs. 174 without netting of entertainment tax.

Key Metrics - Annual

Source: Company; Notes : * ARPU & hardware subsidy taken as Q4 data for respective years. # Market share based on gross subscribers as on 30th June, 2016 as per market estimates (R) Restated post netting off of collection charges

132 138 150 151 157 163 172 174 50 100 150 200 250 300 FY09 FY10 FY11 FY12 FY13 FY14 FY15(R) FY16 ARPU* (Rs.) 26% 26% 21% 12% 5% 20% 16% Dish TV Tata Sky Sun Direct Big TV Airtel Digital Videocon D2h Market share # 1,465 1,153 400 800 1200 1600 2000 2400 FY15 FY16 Hardware subsidy* (Rs.) 4.3 5.7 8.5 9.6 10.7 11.4 12.9 14.5 5 10 15 20 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Net subscriber base (mn.)

11

Key Metrics - Annual

Notes: * Including deferred tax assets of Rs. (4,360) mn. (R) FY15 Subscription revenue is restated, netting off of collection charges

(1,233) 1,117 2,380 4,960 5,794 6,240 7,331 10,249

• 4000
• 2000

2000 4000 6000 8000 10000 12000 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 EBITDA (Rs. mn.) 47% 40% 35% 31% 30% 31% 30% 28% 0% 10% 20% 30% 40% 50% 60%

FY09 FY10 FY11 FY12 FY13 FY14 FY15(R) FY16

5,897 8,353 11,927 16,639 19,228 22,681 24,499 28,275

• 5,000

10,000 15,000 20,000 25,000 30,000 35,000

FY09 FY10 FY11 FY12 FY13 FY14 FY15(R) FY16

Subscription revenue (Rs. mn.) Programming and other costs as % of revenues (4,807) (2,622) (1,920) (1,331) (660) (1,576) 31 6,924

• 5500
• 3500
• 1500

500 2500 4500 6500 8500 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Net profit/(loss) (Rs. mn.)

12

*

Key Metrics - Quarterly

0.389 0.508 0.402 0.1 0.2 0.3 0.4 0.5 0.6 1QFY16 4QFY16 1QFY17 Net subscriber additions (mn.) 173 174 165 150 160 170 180 1QFY16 4QFY16 1QFY17 ARPU (Rs.) 6,828 7,410 7,282 2000 4000 6000 8000 10000 1QFY16 4QFY16 1QFY17 Subscription revenue (Rs. mn.) 2,357 2,608 2,646 32.0% 32.6% 34.0% 20.0% 21.0% 22.0% 23.0% 24.0% 25.0% 26.0% 27.0% 28.0% 29.0% 30.0% 31.0% 32.0% 33.0% 34.0% 35.0% 36.0% 37.0% 38.0% 39.0% 40.0% 500 1000 1500 2000 2500 3000 1QFY16 4QFY16 1QFY17 EBITDA (Rs. mn.) & EBITDA margin 542 4,828 409 1500 3000 4500 6000 1QFY16 4QFY16 1QFY17 Net profit (Rs. mn.) 689 1,047 627 300 600 900 1200 1500 1QFY16 4QFY16 1QFY17 FCF (Rs. mn.)

13

Notes: * 1QFY17 ARPU is derived post netting-off of entertainment tax from subscription revenue. ARPU of Rs. 174, on a like-to-like basis. ^ Subscription revenue is post netting off of entertainment tax., On a like-to-like basis, subscription revenues were Rs. 7,669 million. # Net profit for 4QFY16 & 1QFY17 includes deferred tax assets of Rs. 4,360 mn. & Rs. 212 mn. respectively. Net profit of 4QFY16 & 1QFY17 is post current tax of Rs. 331 mn. & Rs. 435 mn. respectively.

*

^

# #

Strategy and Outlook

14

DAS Phase III & IV

Zing Digital

15

Specific vernacular markets ‘Zing’ Se Set-Top-Box matl atlab Di DishTV

Dish99

Packs starting @ just ₹ 99

MANDATORY subscription to a minimum 3 of the above mentioned add-on packs on subscribing to Dish 99

Any of the Family add-on packs @ ₹ 25 each p.m. Any of the Sports add-on packs @ ₹ 50 each p.m. Any of the English add-on packs @ ₹ 75 each p.m.

Across phase III & IV markets ‘Dish 99’

Regional first; regional language channels , regional look and feel FTA channels + any 3 of Family / Sports / English

OR OR OR OR

• Easy transition for first time digital subscribers
• Value for money offering; digital quality picture at the price of cable
• Customized content in digital quality
• Healthy margins

+

ARPU driver Key differentiator vis- à-vis cable

HD D ADD ADD-ONS Game on HD @ Rs. 165

(Sports and Hindi entertainment)

Full on HD @ Rs. 220

(Complete dose of entertainment)

Dish TV Tata Sky Videocon D2h 2h Sports Channels New Super Family + Game on HD Dhamal Mix + HD Access Fee Gold Maxi+ HD Access Fee Rs.

• s. 435

435 Rs.

• s. 425

425 Rs.

• s. 455

455 Star Sports HD1 √ X X Star Sports HD2 √ √ √ Star Sports HD3 √ √ X Star Sports HD4 X X X Sony Six HD √ X X Ten 1 HD √ X X

High Definition

Source: Market data as on 31st March 2016

16

Hindi GEC Hindi Movies & Music Sports HD Infotainment, Lifestyle & Kids English Entertainment English Movies HD South

Box Cost Rationalization

HI-DEFINITION SACHETS STARTING AT Rs. 75 EACH PER MONTH

42, 62% 22, 33% 4, 5% DTH revenue IPTV revenue Cable TV revenue 225 1,117 1,570 168 800 1,105 31 62 120 27 255 345

• 200

400 600 800 1,000 1,200 1,400 1,600 1,800 2010 2016P 2020P Pay TV Subs DTH Subs Cable Subs IPTV Subs

International Expansion - Sri Lanka

Sri Lanka

• Population ~ 21 million
• TV penetration at 80%
• High digital penetration; 95% of total Pay TV

subscribers

• DTH maintains dominance with ~ 72%

market share. Cable, distant second despite being 4 years older

• ARPU ~ USD 6 pm
• Zero subsidy on CPE sales

Source: MPA 2016

Pay TV industry revenue (USD mn.) Pay TV subscribers (000)

17

Financials

18

Quarter ended Quarter ended

• Rs. million

June – 2015 June – 2016 Operating revenues 7,367 7,786* Expenditure 5,009 5,139 EBITDA 2,357 2,646 EBITDA margin (%) 32.0 34.0 Other income 262 119 Depreciation 1,598 1,613 Financial expenses 480 521 Profit / (Loss) before tax 542 631 Tax expense

• 223

Net Profit / (Loss) for the period 542 409

1QFY 2016 vs. 1QFY 2017

Operating revenue break-up (Rs. mn)

1QFY - 2017

Summarized Consolidated P&L - Quarterly

19

5.7 2.6 12.2 (54.7) 0.9 8.6

Variance(1QFY16 vs.1QFY17) in %

7,282 51 254 124 75 Subscription revenue Lease rentals Bandwidth charges Advertisement income Teleport services, CPE & Other

Notes: * Quarter ended June 2016 operating revenues, on a like-to-like basis, were Rs. 8,172 million. A growth of 10.9% Y-o-Y. # Quarter ended June 2016 subscription revenues, on a like-to-like basis, were Rs. 7,669 million.

#

Year ended Year ended

• Rs. million
• Mar. – 2015
• Mar. – 2016

Operating revenues 26,879 30,599 Expenditure 19,548 20,350 EBITDA 7,331 10,249 EBITDA margin (%) 27.3 33.5 Other income 635 640 Depreciation 6,138 5,907 Financial expenses 1,754 2,087 Profit / (Loss) before tax 74 2,895 Tax expense 42 331 Deferred tax assets

• (4,360)

Net Profit / (Loss) for the period 31 6,924

FY 2015 vs. FY 2016

Operating revenue break-up (Rs. mn)

FY - 2016

Summarized Consolidated P&L - Annual

20

13.8 4.1 39.8 0.8 (3.8) 19.0

Variance(FY15 vs. FY16) in %

28,275 406 1,055 499 365 Subscription revenue Lease rentals Bandwidth charges Advertisement income Teleport services, CPE & Other

• Rs. million

March`2016 (Audited) EQUITY AND LIABILITIES Shareholders’ funds (a) Share capital 1,066 (b) Reserves and surplus 2,741 3,807 Non-current liabilities (a) Long-term borrowings 11,535 (b) Other long term liabilities 635 (c) Long-term provisions 173 12,343 Current liabilities (a) Short-term borrowings 28 (b) Trade payables 2,298 (c) Other current liabilities 8,766 (d) Short-term provisions 12,151 23,243 Total 39,394

Consolidated Balance Sheet

21

• Rs. million

March`2016 (Audited) ASSETS Non-current assets (a) Fixed assets 24,201 (b) Non-current investments 1,500 (c) Deferred tax assets 4,360 (d) Long-term loans and advances 1,692 (e) Other non-current assets 27 31,780 Current assets (a) Current investments 820 (b) Inventories 126 (c) Trade receivables 725 (d) Cash and bank balances 3,392 (e) Short-term loans and advances 2,308 (f) Other current assets 243 7,613 Total 39,394

Consolidated Balance Sheet (continued)

22

Annexure

23

 One of India's 's lar argest ver ertica cally y integrated media and and en entertainment gr group, and and al also one of the lea eading producers, co content ag aggre gregators and and distributors of Indian programming gl globally  One of the lar argest produce cers and and ag aggregators of Hin Hindi programming in the wo world Other Businesses Essel Group Me Media

Launched in 1992 One of India’s largest media and general TV entertainment network Launched in 1992 Strong presence in national and regional news genre

Founded by Dr. Subhash Chandra Group Market Cap ( Listed entities under Essel Group ): Rs 645.7 bn(1)

Source: Company websites, BSE, MPA Report 2016 Note: (1) Market capitalization as on 4th August, 2016

Market Cap: Rs 467.0 bn(1) Market Cap: Rs 11.0 bn(1) Launched in 2005 Asia’s largest DTH service provider Launched in 2006 One of India’s largest MSO, presence across 54 cities Daily News & Analysis Market Cap: Rs 104.1 bn(1) Market Cap: Rs 30.3 bn(1) Launched in 2005 English broadsheet daily with presence across Mumbai, Bangalore, Pune, Ahmedabad, Jaipur & Indore

Content Distribution

Zee Entertainment Zee Media Corp. Ltd. Dish TV SITI Cable Network

 Packaging (Essel Propack) – Market Cap: Rs 33.3 bn(1)  Theme Parks: Essel World and Water Kingdom  Playwin: India’s first and largest

• nline gaming company

 Cornership: Animation studio  Cyquator Technologies: IT Infrastructure outsourcing  Infrastructure  Education  Precious Metals  Healthy Lifestyle & Wellness

24

Launched in 197 1976, Essel Group is one of India’s largest business houses, with a dominant presence in Media

Thank You

25