Dish TV Q3 Result Update

Dish Ltd. declared its second quarter result on 22nd January 2010. The results came better than the street expectations, on account of an impressive growth in new subscribers and reduction in cost of production. The sales were at Rs. 277.21cr above the consensus estimate of Rs. 223.00cr, whereas the net loss was Rs. 76.22cr. as against the street estimate of Rs. 151.00cr.

Result Highlights:

• The net sales for the quarter ended December 09 grew by 43.83% to Rs. 277.21cr from Rs 192.73cr in 3Q09 due to addition of new subscribers to the tune of 0.55 million
• The EBIDTA for the quarter ended December 09 increased by a whopping 129.8% to Rs. 11.60cr while the EBIDTA margin improved by 2434.1 basis points (bps) to 4.18% as compared to -20.16% reported a year ago
• Improvement in the EBIDTA margin is mainly on account of decline the total expenditure cost. The cost of goods and services as a % of sales declined from 72.59% in 3Q09 to 65.16% in 3Q10
• Company’s net interest expense decreased by 50.5% y-o-y to a level of Rs.11.05cr
• Company’s net loss for the quarter ended December 09 reduced significantly by 35.4% to Rs. 76.22cr as compared to a net loss of Rs. 118.06cr reported a year ago
• During the quarter, the Company raised USD 100 million through issue of GDRs, which would be utilized towards expanding its subscriber base
• During the quarter, Dishtv also entered into a tie up with Axis Bank for collection of DTH Subscription Recharge
• The Company is likely to target subscribers which are below Rs 100 on DD Direct which is a zero subscription as none of the DTH players are looking for subscribers below Rs 125

DTH industry is expected to grow more than 50% in the next 3 years and Dish TV would strive to take a large share of the business. The Company would continue to focus on increasing ARPU, value added services, commercial sales (e.g. hotels, restaurants, pubs, clubs, malls etc), brand building and penetration, service capability ramp up resulting in value creation for the stakeholder. Thus I strongly believe that one should keep holding Dish TV in a long term time horizon portfolio.