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

• ther 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

1

Indian M&E Industry Snapshot

241 172 104

62

42% 30% 18% 11%

2008

223.2 262.3 295.9 126.6 161.8 193.3 90.7 135.0 173.2

2008 2013 2018 Total HHs TV HHs C&S HHs Indian television market statistics (mn. HHs) Source: M&E industry composition & size: FICCI-KPMG 2014, Indian television statistics & broadcasting and distribution industry.: MPA Report 2013

417 243 125 133

45% 26% 14% 14%

TV Print Films Others 2013

885 374 220 307

50% 21% 12% 17%

2018

• TV penetration (of total HHs) ~ 62% - 65%
• C&S penetration (of TV HHS) ~ 83% - 90%

Average household size of 5.1

Broadcasting Industry Distribution Industry Multiple broadcasters

producing content in

15 languages

across

7 genres

beaming

~788 channels 28% 46%

DTH Analog Cable

15%

Digital Cable

M&E industry composition & size (INR bn.) 580 918 1,786 2013 - 2018 2

Indian Television Industry

CAGR of 5.11% (2013-2018)

Distribution Industry

3

Digital Addressable Systems - DAS

90% of Total Revenue Phase I Phase III & IV

• Opening up of cable stronghold markets
• Bonus additions for the sector

DTH

• Land grab seeding at throw away prices
• No addressability/KYC
• Working backwards to fill in the critical gaps; billing, collection

and dunning

Cable Phase II

Delhi, Mumbai, Calcutta & Chennai 38 notified cities 30-June-2012 31-Mar-2013 Rest of India 31-Dec-2014

• Higher incremental net adds; positive shift in subscriber

distribution

• 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

100% 100% 100% 100% 100% 100% 99% 93% 69% 45% 0% 20% 40% 60% 80% 100% 120%

Digital Penetration of Total Pay-TV Subscribers in India is Amongst the Lowest * Dish TV

4 Source: *MPA Report 2013

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

3 Tiered Structure

MSOs

(more than 115 )

Distributors

(at least 1 for each MSO)

LCOs

(more than 50,000)

• Digital signal - fatter pipe, larger carrying capacity.
• Lack of addressability
• Continued low content payout & dependence on placement fees
• Efforts on to roll out last mile billing

Pre-DAS Post-DAS

1990 - 2014

5

Distribution Industry - DTH

• 100% digital
• Owns last mile subscribers
• Subscription driven top-line
• Fully prepaid
• DTH contributes ~ 60% of the

broadcaster’s domestic subscription revenue; scope for rationalization vs. cable

• Fully tax compliant
• Heavily taxed:
• License fees – 8% AGR instead of

10% GR (TRAI recommendations on issues related to new DTH licenses)

• Entertainment tax - likely to be

subsumed post rollout of GST

DTH Players in India Dish TV Tata Sky Videocon D2h

• Industry pioneer. Started operations in 2003
• Part of the ‘Zee’ stable, largest producer and aggregator of Hindi

programming in the world.

• Launched in 2006.
• JV between the TATA Group and News Corp
• Launched in 2009
• Part of the white goods manufacturing, Videocon group.

Airtel Digital

• Launched in 2008
• Part of the telecom major Bharti Airtel.

Sun Direct

• Launched in 2007
• JV between Sun Network and Astro, Malaysia

Reliance Digital

• Part of Reliance Communication Ltd, a subsidiary of Reliance ADA

group 6

Dish TV

7

Key Managerial Personnel

Key Managerial Personnel – Pioneers and Visionaries Non Executive Chairman

• Promoter of the ‘Essel’ Group of companies
• India’s media mogul and founder of ‘Zee’, India’s first

satellite television channel in 1992 & later India’s first private news channel, Zee News

• A self-made man, has consistently demonstrated his ability

to identify new businesses and lead them on the path to success

• Other business interests, education, theme parks, wellness

Subhash Chandra

Managing Director

• Key architect in creation and expansion of Essel Group of

Companies

• Key architect of cable TV services, established ‘Siti Cable’

in 1994

• Pioneered the DTH services in India and has been

instrumental in establishing Dish TV

• Past president of IBF for four consecutive years upto 2010
• An active member on the Board of various committees set

up by MIB, for addressing critical industry matters Jawahar Lal Goel

CEO

• India and South Asia MD of ESPN Star Sports prior to

joining Dish as its CEO.

• Current President of DTH Operators Association
• More than 27 years of experience & a successful track

record in turning around businesses for brands like Oral-B, Nestle and Kellogg’s R.C. Venkateish

65% 8% 12%2% 13%

Promoters GDR; held by Apollo PE, USA FII (incl. 3% of Apollo PE)

• Fin. Inst., Banks & MF

Other Investors

Shareholding Pattern*

Many Firsts to its Credit

• 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 DTH industry
• First to launch High Definition
• First to offer unlimited recording
• First to be FCF positive
• First to launch online TV for DTH viewers – ‘Dish on Line’
• First to launch a sub-brand targeting regional language

markets– ‘Zing’ 8 *Shareholding pattern as on 21st July 2014

Business Model

Box Rent

Revenue Expenses

License fees

EBITDA

Other operating costs Employee benefit expenses Programming and other cost

Business Model

• Upfront subsidy on Consumer premises equipment (CPE)

Advertising income Bandwidth income

Consolidated P&L Structure - FY14

2% 1% 5% 4% 31% 25%

Commission Selling and distribution expenses

10% 7% 6% 11%

Subscription revenues

90%

Other expenses

5%

• Advance inflows of subscription revenues
• Churn at 0.7% p.m.
• Implied average subscriber life of 12 years

9

Other income

2%

• Average ARPU of Rs. 170

Dish TV vs. Competition

90% of Total Revenue 30% of Revenue

• Highest transponder capacity
• Maximum content tie-ups
• Maximum HD channels
• Widest service network
• Widest dealer-distributor network

377 291 326 213 250 346 46 24 20 10 10 27 100 200 300 400

Dish TV Tata Sky Airtel Sun Direct Rel. Digital Videocon

Linear and HD channels Linear HD

Dealer-Distributor Network

Transponder Bandwidth Dish TV Tata Sky Airtel Sundirect Reliance Digital Videocon Satellite NSS6, Asiasat 5 Insat 4A SES 7 Measat 3 Measat 3 Singtel ST-2 Number of Transponders 14 12 11 4+2 9 8 TP Bandwidth (MHz) 36,54 36 36 36 36 54 Total Bandwidth (MHz) 648 432 396 216 324 432 10 6 Zonal offices 14 Regional offices Source: Company & market data as on 30th June 2014

Key Metrics

90% of Total Revenue

75% 64% 55% 43% 37% 34% 34% 34% 0% 10% 20% 30% 40% 50% 60% 70% 80% FY08 FY09 FY10 FY11 FY12 FY13 FY14 1QFY15 Programming and other costs as % of subscription revenues 27% 20% 12% 7% 19% 15% Dish TV Tata Sky Sun Direct Big TV Airtel Digital Videocon D2h Market share* 2.5 4.3 5.7 8.5 9.6 10.7 11.4 11.7 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 FY08 FY09 FY10 FY11 FY12 FY13 FY14 1QFY15 Net subscriber base (mn.) 11 Source: Company Note : * Market share based on gross subscribers as on 30th June, 2014 as per market estimates

Key Metrics (continued)

90% of Total Revenue 30% of Revenue

2,035 2,505 2,383 2,224 2,127 1,996 1,800 1,800

• 500

1,000 1,500 2,000 2,500 3,000 FY08 FY09 FY10 FY11 FY12 FY13 FY14 1QFY15 SAC (Rs.) 131 132 138 150 151 157 163 170

• 50

100 150 200 FY08 FY09 FY10 FY11 FY12 FY13 FY14 1QFY15 ARPU (Rs.) 15.5 19.0 17.3 14.8 14.1 12.7 11.0 0.0 5.0 10.0 15.0 20.0 FY08 FY09 FY10 FY11 FY12 FY13 FY14 SAC/ARPU (months) 12 Source: Company Note : SAC & ARPU taken as Q4 data for respective years.

Strategy and Outlook

13

Introducing Zing - Phase III & IV

90% of Total Revenue 30% of Revenue

• Sub Brand of Dish TV
• Regional first; regional language

channels , regional look and feel

• Regional first national second; unlike

mainstream brands

• Customized regional content in digital

picture quality and stereophonic sound

• Vfm offering.
• Higher gross margin
• Now available across Odisha, West

Bengal, Tripura, parts of Assam and most parts of Maharashtra.

18.0% 8.7% 30.0% 18.4% 1.2% 2.6% 12.3% 8.6% Viewership share by genre – 2013*

Regional GECs, Regional News, Movies & Music Hindi GECs Hindi News & Movies English Entertainment & News Sports Music, Kids & Infotainment Other

14 Source: * FICCI Frames - 2014

Long Term Focus

15 1,640 1,840 1,999 2,249

• 500

1,000 1,500 2,000 2,500 Before Feb' 13 w.e.f. Feb' 13 (First hike) w.e.f. Feb' 13 (Second hike) w.e.f. July' 13 Offer Price Hike - SD (Rs.) 2,890 3,099

• 500

1,000 1,500 2,000 2,500 3,000 3,500 Before Feb' 13 w.e.f. Feb' 13 Offer Price Hike - HD (Rs.)

Minimizing Subsidy

3,359 3,218 2,939 2,837

• 500

1,000 1,500 2,000 2,500 3,000 3,500 4,000 FY - 11 FY - 12 FY - 13 FY - 14 Dish TV - Investment per net subscriber (Rs.)

Reducing Investment per Subscriber

ARPU Expansion

16 200 255 305 380 220 280 320 400 220 300 340 421 100 200 300 400 500 Family Super Gold Super World Super Platinum Previous price Revised price (w.e.f. April'13) Revised price (w.e.f. June'14) Pack Price Hike - SD (Rs.) 385 460 560 399 499 599 100 200 300 400 500 600 700 Super HD World Super HD Premiere Super HD Royale Previous price Revised price (w.e.f. April'13) Pack Price Hike - HD (Rs.) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% Pakistan Korea Taiwan India China Sri Lanka Thailand Vietnam Malaysia Philippines Japan Indonesia Australia New Zealand ARPU as a % of GDP per HH* Pay-TV ARPU as a % of PPP-adjusted GDP per Household Source: * MPA Report 2013 % Pay-Tv Pen./TV HH

Key Focus Areas

Growth with Profitability Balance Sheet strengthening Focus on Cash Flows

• Debt repayment of ~ USD 65 million in FY15
• Maintaining market leadership while aiming to minimize subsidy
• Free cash flow of ~ Rs. 3,127 million in FY14

Content Cost Rationalization

• Re-look at fixed fee vs. per subscriber model

17

Financials

18

Summarized Standalone P&L - Quarterly

4QFY 2014 vs. 1QFY 2015

Quarter ended Quarter ended

• Rs. million

March – 2014 June – 2014 Operating revenues 6,369 6,407 Expenditure 5,080 4,836 EBITDA 1,289 1,571 EBITDA Margin (%) 20.2 24.5 Other Income 201 116 Depreciation 1,491 1,452 Financial expenses 326 395 Profit / (Loss) before prior period & tax (327) (160) Prior period items (1,164)

• Tax expense/(write back)
• Net Profit / (Loss) for the period

(1,490) (160)

5 (2.6)

(43)

21.9 (4.8) 0.6

Variance(4QFY14 vs.1QFY15) in %

19

5,886 230 124 77 89 Subscription revenue Lease rentals Bandwidth charges Advertiseme nt income Teleport services, CPE & Other

Operating revenue break-up (Rs. mn) 1QFY - 2015

Summarized Consolidated P&L - Annual

FY 2013 vs. FY 2014

FY 2013 FY 2014

• Rs. million

(Audited) (Audited) Operating revenues 21,668 25,090 Expenditure 15,874 18,849 EBITDA 5,794 6,241 EBITDA Margin (%) 26.7 24.9 Other Income 511 649 Depreciation 6,276 5,974 Financial expenses 1,284 1,327 Profit / (Loss) before exceptional items (1,254) (412) Exceptional items 594

• Profit / (Loss) before prior period & tax

(660) (412) Prior period items

• (1,164)

Tax expense/(write back) 0.1 0.5 Loss attributable to minority 0.1

• Net Profit / (Loss) for the period

(660) (1,576)

3.3 (4.8) 27.0 7.7 18.7 15.8

Variance(FY13 vs. FY14) in %

20

22,681 1,169 496 360 383 Subscription revenue Lease rentals Bandwidth charges Advertiseme nt income Teleport services, CPE & Other

Operating revenue break-up (Rs. mn) FY - 2014

Consolidated Balance Sheet

FY13 vs. FY14

• Rs. million

FY 2013 (Audited) FY 2014 (Audited) EQUITY AND LIABILITIES Shareholders’ funds (a) Share capital 1,065 1,065 (b) Reserves and surplus (2,621) (4,191) (1,556) (3,126) Non-current liabilities (a) Long-term borrowings 8,460 7,791 (b) Other long term liabilities 1,504 918 (c) Long-term provisions 127 142 10,092 8,851 Current liabilities (a) Short-term borrowings 300 658 (b) Trade payables 2,138 1,357 (c) Other current liabilities 14,027 11,601 (d) Short-term provisions 6,547 8,361 23,012 21,977 Total 31,548 27,702

21

Consolidated Balance Sheet (continued)

FY13 vs. FY14

• Rs. million

FY 2013 (Audited) FY 2014 (Audited) ASSETS Non-current assets (a) Fixed assets (i) Tangible assets 14,273 13,495 (ii) Intangible assets 67 76 (iii) Capital work-in-progress 6,535 4,226 20,875 17,797 (b) Non-current investments

• 1,500

(c) Long-term loans and advances 646 881 (d) Other non-current assets 97 73 743 2,454 Current assets (a) Current investments 2,782 500 (b) Inventories 86 75 (c) Trade receivables 304 415 (d) Cash and bank balances 3,645 3,426 (e) Short-term loans and advances 3,060 3,029 (f) Other current assets 53 5 9,929 7,451 Total 31,548 27,702

22

Thank You

23

Annexure

24

26  One of India's largest vertically integrated media and entertainment group, and also one of the leading producers, content aggregators and distributors of Indian programming globally  One of the largest producers and aggregators of Hindi programming in the world Other Businesses Essel Group 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 390.5 bn(1)

Source: Company websites, BSE, MPA Report 2013

Note: (1) Market capitalization as on 22nd July, 2014

Market Cap: Rs 287.5 bn(1) Market Cap: Rs 6.5 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 62 bn(1) Market Cap: Rs 17.1 bn(1) Launched in 2005 English broadsheet daily with presence across Mumbai, Bangalore, Pune, Ahmedabad, Jaipur & Indore

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

Zee Entertainment Zee Media Corp. Ltd. Dish TV SITI Cable Network  Packaging (Essel Propack) – Market Cap: Rs 17.4 bn(1)  Theme Parks: Essel World and Water Kingdom  Playwin: India’s first and largest online gaming company  Cornership: Animation studio  Cyquator Technologies: IT Infrastructure outsourcing  Infrastructure  Education  Precious Metals  Healthy Lifestyle & Wellness

Essel Group

25

Oct 03: Received license to operate DTH Services

2003 2006 2007 2008 2009 2011 2010 Growth Trajectory Since Listing Asia’s Largest DTH Provider Company Profile Net Customer Base Total Revenues EBITDA (% margin) Market Capitalization(3) ~ Rs 54.8 billion First Indian DTH player < 3.0 million Rs 4,162 million (Rs 2,095 million) ~ Rs 21.1 billion 2008(1) 2014(2)

Jan 09: Rights offering of shares for ~Rs. 11.4 bn. Mar 09: EBITDA breakeven in Q4 FY09 Nov 09: Raised $100mn through GDRs to Apollo for 11% ownership May 05: Launch of DTH Services May 10: Launched HD services Dec 10: Acquired additional transponders on Asiasat 5 July12: Net subscriber base crosses 10 million Apr 04: Obtained teleport license from MIB

Source: Company filings, Company website, BSE, NSE, MPA Report 2013 Notes: (1) 2008 reflects FY 2008 year end results (2) Total Revenues and EBITDA for 2014 reflect FY2014 year end results. Customer base as of March 31, 2014 (3) 2008 market capitalization as on March 31, 2008; 2014 market capitalization as on May 28, 2014

Apr 07: Listing of Equity Shares on NSE and BSE

2004 2005 2012 11.4 million Rs 25,090 million Rs 6,241 million (25%) 2013 & 2014

Full year of Positive Free Cash Flow

Key Milestones and Performance

26