Multiple taxes taking toll on DTH biz

At present, the direct-to-home (DTH) industry has a customer base of 65 million out of 141 million households that have access to television channels in the country. However, all the companies operating in this space are making losses despite investing over $4.5 billion in the past 10 years. “This sector can attract more investments and clock higher growth if government reduces huge burden of multiple taxes such as import duty, service tax, licence fee and entertainment tax,” Salil Kapoor, Chief Operating Officer, Dish TV, tells P Madhusudhan Reddy in an exclusive interview

What are the challenges that the DTH segment is facing in the country?
Multiple taxation is the biggest challenge we are facing. There is import duty on the boxes in addition to service tax, license fee and entertainment tax in some states. All these combined are leaving a huge tax burden on the sector. Of course, we can invest more, but the industry needs to be profitable. The entire DTH industry has already invested about $4.5 billion till now, no company is making profits. Dish TV, which has invested over $900 million till date, is only EBITDA positive now, not PAT positive. The real challenge here is that on the one side, the box is given on subsidy and on the other side, there is huge tax burden. So, the industry gets very little for itself. That’s why there is not enough investment that is coming forward.

What kind of growth the segment is lagging in?
The country has over 23.5 crore households. Of them, nearly 141 million (14.1 crore) households have access to television services. The DTH segment accounts for nearly 65 million (6.5 crore), clocking an average yearly growth of 13 to 14 per cent. This is a fantastic growth as DTH industry was no where a decade ago. But it can grow much faster if multiple taxation hurdles are removed. Though the digitalization process is getting delayed, that is not our main worry. This so because we are doing our own bit in this regard.

What is the customer base of Dish TV now? How many new customers does it intend to acquire this fiscal?
At present, Dish TV has a customer base of 16.6 million in the country. We are not only the largest DTH operator in India, but also across Asia. Our company is looking to acquire 25 lakh new customers this year. So, the number of boxes we sell will be equal to that number. We sell DTH boxes at subsidized rates. That is our capital expenditure. It is significant because every box costs substantial money. The subscriber acquisition cost is over Rs 2,100 and we have to make requisite capital deployment to that effect.

Is Dish TV planning an overseas foray?
Dish TV is in the process of launching its operations in Sri Lanka. We have already set up up-linking station there. We will soon launch the services. However, it is too early to give the quantum of investment the company will make there. As of now, we have no plans to launch our services in any other country. It has come to our notice that some people are using Dish TV products in the Middle East. But we have not rolled out our services in those countries. So, my sincere advice to all those who are taking Dish TV products from India and using them in Middle East that they should not use our products.

Dish TV has recently launched Zing, an exclusive DTH product for Telugu people. What kind of business you are expecting from the new product?
The Zing digital is our new brand targeted at regional language markets. We have already rolled out the product in West Bengal (Bangla), Orisha (Oriya) and Maharashtra (Marathi) where the new brand has receiving overwhelming response, clocking over triple digit growth for our company. We expect similar response in Andhra Pradesh and Telangana markets for our Zing Digital Telugu. Both these states account for 14 million users of cable and satellite television services. Of this, over three million households access television channels through the DTH route. That means over 11 million households in AP and TS still use cable TV services. Our Zing Digital is targeted at them. Our studies revealed that nearly 3 to 4 million users are ready to switch to DTH platforms, but are looking for an affordable plan. We are hopeful of acquiring major chunk of these customers. On the entry-level package in Zindagi Digital which is priced at Rs 99 per month, we are offering 38 Telugu and over 100 other channels. Besides, we are also offering DTH box at just Rs 1,099, the lowest price point in the market. We have close to 2,500 dealers across AP and Telangana. The number is growing as we are adding more and more dealers. In addition, we also have around 2,000 recharge dealers. With such a large network in place, we have wide representation across both the states.