MUMBAI: Is a deal between two big direct-to-home (DTH) operators brewing?
Dish TV has denied a media report that it is in talks to acquire Videocon d2h. According to a CNBC-TV18 report, the two companies are negotiating on valuations close to $1 billion.
“This is because Videocon’s asking price is currently higher than what Dish TV has offered. Even the lenders have suggested that sale of Videocon d2h to Dish TV is likely,” the business news channel reported.
Jawahar_Goel02“We are not in talks at all,” Dish TV managing director Jawahar Goel told TelevisionPost.com.
NASDAQ-listed Videocon d2h’s market capital stands at $855 million and net debt at Rs 1,600 crore (Rs 16 billion). Dish TV’s market cap is Rs 10,514.42 crore (Rs 105.14 billion).
In its clarification to the news relating to the proposed acquisition of Videocon d2h, Dish TV said that it is “speculative in nature.” Commenting further, Dish TV said that “as a policy, it does not comment on market speculations and rumours”.
Videocon d2h has also denied to CNBC-TV18 that it has had any deal talks with Dish TV.
Dish-Tv logoDish TV is India’s largest DTH operator in terms of subscribers. The company has a net subscriber base of 14.5 million, as per data till 31 March 2016. Videocon’s total net subscriber base stands at 11.86 million.
Videocon d2h’s content cost accounted for 37.8% of the company’s revenue in FY16. For Dish TV, programming content and other costs stood at Rs 855.46 crore (Rs 8.55 billion) in FY16, up 6.8% from Rs 800.75 crore (Rs 8.01 billion) a year ago.
The DTH sector in India has not seen any equity deals among the players to consolidate the market. Earlier, Reliance Digital TV was in merger talks with Kalanithi Maran-promoted Sun Direct. The deal made some sense as both DTH operators are located on the same satellite. However, the talks fell through over valuations.
Apart from the Reliance Digital TV and Sun Direct’s attempt to marry, there have been no talks among the other DTH operators to merge or buy stakes to consolidate the market.
Out of the six private DTH operators in India, four companies have rapidly grown their subscriber numbers over the last few years. While Dish TV is higher, Tata Sky, Videocon d2h and Airtel Digital TV all have over 11 million subscribers each.
Sun Direct, on the other hand, has positioned itself as a southern regional DTH operator while Reliance Digital TV has reported tepid growth in subscriber numbers.
videocon-d2h-logo-coverVideocon d2h expects to be profitable at the net level in the year. In the exit quarter of FY16, net loss had narrowed to Rs 21.2 crore (Rs 212 million) compared to Rs 75.7 crore (Rs 757 million) in the prior-year quarter.
“Fiscal 2017 will be a landmark year as we will achieve positive free cash flow break-even during the year. This is assuming subscriber growth in line with the current growth trend,” Videocon d2h executive chairman Saurabh Dhoot had earlier said.