1. Incremental opportunity for Sun TV up to Rs 2.1 b

Incremental opportunity for Sun TV up to Rs 2.1 b

Media reports suggest that state-owned Arasu Cable has been granted a provisional digital MSO license by the ministry of information and broadcasting (MIB) after a five-year-old logjam.

By: | Published: April 27, 2017 5:24 AM
The incremental opportunity for SUN TV from Arasu going digital is Rs 2.1b. (Reuters)

Media reports suggest that state-owned Arasu Cable has been granted a provisional digital MSO license by the ministry of information and broadcasting (MIB) after a five-year-old logjam. This would be a first instance in the pay TV distribution space, where a state-run organisation will largely cater to the cable needs of subscribers. The decision to grant a permanent license to Arasu hinges on the outcome of the Inter-Ministerial Committee’s (IMC) meeting on the TRAI’s recommendation of not allowing government entities to enter the broadcasting and pay TV distribution business.

The MIB has also set a three-month deadline to switch-off analog signals. Tamil Nadu has ~17m subscribers (C&S households), of which ~2.5m reside in Chennai (largely digitized). Of the 17m subscribers, ~8m reside with Arasu (which pays a minimum guarantee of ~Rs 25m/month to SUNTV – i.e, ~Rs3/sub/month), while the remaining 9m reside with other MSOs and DTH operators. SUN TV is estimated to garner ~Rs 25 and Rs 40 per sub per month from MSOs (ex-Arasu) and DTH operators, respectively. The incremental opportunity for SUN TV from Arasu going digital is Rs 2.1b. However, Arasu being the most dominant player is expected to extract a lion’s share of ARPU even in a digitised Tamil Nadu. We believe the needle could move meaningfully if the new tariff regulation is implemented as that would reduce Arasu’s bargaining power.

You May Also Want To Watch:

While Arasu has already invested in digital head-ends and other DAS infrastructure across four southern states, we note that set-top box (STB) procurement for an estimated ~8m subscribers is yet to be made. This translates into ~Rs 10-11b capital outlay (Rs 1,300/STB) over next three months, and deployment of STBs could take ~6-9 months. Arasu could remain non-committal on capital outlay before it is granted a permanent license by MIB. It is also likely to seek timeline extension to roll-out STBs on the ground.

  1. No Comments.

Go to Top