Mumbai, March 24: Subscribers should brace for higher direct-to-home (DTH) charges as the operators gear up to cash in on the digitisation drive.
Dish TV India Ltd of the Essel group has hiked prices of its monthly subscription pack by 10 per cent on a pan-India basis.
The increase comes a month after Dish TV, the country’s largest DTH operator, raised set-top box prices by Rs 300. Analysts said other operators were likely to follow suit soon.
The country is in the midst of the second phase of television digitisation. The government had earlier notified that it was obligatory for every cable operator to transmit or re-transmit programmes of any channel in an encrypted form through a digital addressable system in the entire country in four phases.
The deadline for the first phase covering four metros got over in October last year.
The second phase, the deadline for which is March 31, will cover 38 cities with a population of more than one million. This will be followed by all urban areas by September 2014, and the rest of India by December 2014.
While the digitisation drive has pitted multi-system operators and their linked local cable operators against DTH providers, experts say the focus is not on customer acquisition alone.
“Yes, the pricing power is coming to the hands of these operators. They know that profitability is also important if they have to sustain,” Abneesh Roy, associate director of Edelweiss Securities, told The Telegraph.
Roy said the latest price increase by Dish TV would boost its average revenue per user (ARPU) by Rs 12 over the next three quarters.
In a note, he added that though Dish TV’s margin was disappointing in the third quarter, the recent price hikes would raise the margin in 2013-14.
Sources said while DTH operators were not making profits at the net level, the increase in the prices of set-top boxes and packages showed their confidence that the market would be able to absorb this increase.
“The industry is fairly evolved and as most of the multi-system and DTH operators are suffering losses, they don’t have much capacity to undercut each other or go for aggressive pricing. In fact, the pack price of DTH players are almost the same,” an analyst added.
According to Edelweiss, there are around 134 million cable and satellite households in India. The average monthly ARPU stands at around Rs 160.
While the total TV subscription revenue in India is estimated at Rs 25,500 crore, the brokerage estimates that cable operators will benefit from the first two phases of digitisation.
It, however, feels that DTH operators will be key beneficiaries in the third and fourth phases because of severe funding issues of smaller multi-system operators and the huge cost of laying digital ready cable infrastructure in rural areas.