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The potential for the DTH sector in India looks very bright, but for the bottleneck of heavy taxes
India is an exceptional country in more ways than one. And the DTH landscape in the country is a case in point. Nowhere else in the world there are more than two DTH players but India, where there are currently three players operational (Dish TV, Tata Sky & DD direct) and three more (Reliance ADAG, Bharti & Sun Direct) bracing for an entry soon. In the coming few years, investments around $4 billion are expected to drive the growth of the sector. A lot of PE players have also shown keen interest. Early this year, Singapore’s Temasek Holdings invested $55.5 million for 10% stake in Tata Sky. The market buzz says that Tata Sky is up for a second round sale of stake to PE players like Providence Equity Partners, Blackstone Group & Goldman Sachs, to raise $150-$200 million. Subhash Chandra’s Dish TV is also in talks for PE investments.
What makes the DTH space so attractive to the investors & corporates? “There are multiple things happening that will boost the DTH business in the country in coming years” comments Arun Kumar Kapoor, CEO, Dish TV. Digitisation started picking its pace in the country only a couple of years ago. So, there is a huge untapped opportunity to all the digital platforms of content distribution including DTH, Digital cable & IPTV. By the end of this year, the total number of digitised homes in the country is supposed to be around 7 million. The majority 4.5 million will be DTH homes, 2 million will be digital cable and a nominal 0.4 million of them will be IPTV homes. By 2010, around 37 million homes should go digital of which DTH will grab the lion’s share of around 17-20 million homes. And with internet penetration, particularly broadband, not really much to write home about, IPTV would take quite a while to catch up.
Apart from that, CAS rollout is also supposed to fuel the DTH growth. The first phase of CAS roll out (in partial areas of Delhi, Mumbai & Kolkata) gave a huge boost to the sales of DTH set top boxes. There are approximately 7.9 million C&S homes in Delhi, Mumbai & Kolkata. Out of these, 1.6 million were deluged by first phase of CAS & 20% of this 1.6 million opted for DTH. With the second phase of CAS roll out, another 6.3 million homes will be affected. Going by the 20% theory, another 1.2 million (at least) homes are supposed to opt for DTH. And with government aiming to mandate CAS in another 50 odd cities over the next two years, imagine what will be the potential of the DTH space in India even if we just stick to the 20% theory! Arun candidly points out, “People are generally happy with their status quo but once they are forced to shift to a better technology, many of them chose DTH. This presents a huge opportunity for the DTH space on the whole.”
Rising number of TV sets sold in the country is another major driver of the DTH business. Around 14 million Television sets are sold annually in the country, out of which four to five million TV sets are high end. Definitely a majority of these customers are expected to opt for DTH. Says Arun, “In a country like ours, where the economy is growing at a rate of 9%, the TV penetration (which is currently 52%) will also go up as the standard of living of people goes up. All this will fuel the growth of DTH. Adds Vikram Kaushik, CEO, Tata Sky, “The road ahead for the DTH players is long but the potential is huge, as the current subscriptions are just a drop in the growing subscriptions in India.”
However, one major challenge that is troubling the DTH players today is the high taxation. There are multiple level taxes on the DTH players – high license fee, then there is service tax apart from which they have to pay entertainment tax in states. As Arun claims, “We are as high taxed as liquor.” But with more players entering, one can expect that increased lobbying will help them bargain for a better taxation arrangement.
For more articles, Click on IIPM Article.
Source : IIPM Editorial, 2008
An Initiative of IIPM, Malay Chaudhuri and Arindam Chaudhuri (Renowned Management Guru and Economist).
Read these article :-
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
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ZEE BUSINESS BEST B SCHOOL SURVEY
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The potential for the DTH sector in India looks very bright, but for the bottleneck of heavy taxesIndia is an exceptional country in more ways than one. And the DTH landscape in the country is a case in point. Nowhere else in the world there are more than two DTH players but India, where there are currently three players operational (Dish TV, Tata Sky & DD direct) and three more (Reliance ADAG, Bharti & Sun Direct) bracing for an entry soon. In the coming few years, investments around $4 billion are expected to drive the growth of the sector. A lot of PE players have also shown keen interest. Early this year, Singapore’s Temasek Holdings invested $55.5 million for 10% stake in Tata Sky. The market buzz says that Tata Sky is up for a second round sale of stake to PE players like Providence Equity Partners, Blackstone Group & Goldman Sachs, to raise $150-$200 million. Subhash Chandra’s Dish TV is also in talks for PE investments.
What makes the DTH space so attractive to the investors & corporates? “There are multiple things happening that will boost the DTH business in the country in coming years” comments Arun Kumar Kapoor, CEO, Dish TV. Digitisation started picking its pace in the country only a couple of years ago. So, there is a huge untapped opportunity to all the digital platforms of content distribution including DTH, Digital cable & IPTV. By the end of this year, the total number of digitised homes in the country is supposed to be around 7 million. The majority 4.5 million will be DTH homes, 2 million will be digital cable and a nominal 0.4 million of them will be IPTV homes. By 2010, around 37 million homes should go digital of which DTH will grab the lion’s share of around 17-20 million homes. And with internet penetration, particularly broadband, not really much to write home about, IPTV would take quite a while to catch up.
Apart from that, CAS rollout is also supposed to fuel the DTH growth. The first phase of CAS roll out (in partial areas of Delhi, Mumbai & Kolkata) gave a huge boost to the sales of DTH set top boxes. There are approximately 7.9 million C&S homes in Delhi, Mumbai & Kolkata. Out of these, 1.6 million were deluged by first phase of CAS & 20% of this 1.6 million opted for DTH. With the second phase of CAS roll out, another 6.3 million homes will be affected. Going by the 20% theory, another 1.2 million (at least) homes are supposed to opt for DTH. And with government aiming to mandate CAS in another 50 odd cities over the next two years, imagine what will be the potential of the DTH space in India even if we just stick to the 20% theory! Arun candidly points out, “People are generally happy with their status quo but once they are forced to shift to a better technology, many of them chose DTH. This presents a huge opportunity for the DTH space on the whole.”
Rising number of TV sets sold in the country is another major driver of the DTH business. Around 14 million Television sets are sold annually in the country, out of which four to five million TV sets are high end. Definitely a majority of these customers are expected to opt for DTH. Says Arun, “In a country like ours, where the economy is growing at a rate of 9%, the TV penetration (which is currently 52%) will also go up as the standard of living of people goes up. All this will fuel the growth of DTH. Adds Vikram Kaushik, CEO, Tata Sky, “The road ahead for the DTH players is long but the potential is huge, as the current subscriptions are just a drop in the growing subscriptions in India.”
However, one major challenge that is troubling the DTH players today is the high taxation. There are multiple level taxes on the DTH players – high license fee, then there is service tax apart from which they have to pay entertainment tax in states. As Arun claims, “We are as high taxed as liquor.” But with more players entering, one can expect that increased lobbying will help them bargain for a better taxation arrangement.
For more articles, Click on IIPM Article.
Source : IIPM Editorial, 2008
An Initiative of IIPM, Malay Chaudhuri and Arindam Chaudhuri (Renowned Management Guru and Economist).
Read these article :-
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
The Indian Institute of Planning and Management (IIPM)
IIPM Campus
ZEE BUSINESS BEST B SCHOOL SURVEY
For More IIPM Info, Visit below mentioned IIPM articles.
1500-plus IIPM students placed across the country with 44 bagging international offers
IIPM set to beat economic slowdown
IIPM, GURGAON
IIPM - Admission Procedure
IIPM awards four Bengali novelists
The Hindu : Education Plus : Honour for IIPM
IIPM ranked No.1 B-School in India, Management News - By ...
IIPM Ranked No1 B-School in India
Moneycontrol >> News >> Press- News >> IIPM ranked No1 B-School in ...
» IIPM ranked No1 B-School in India :: Education, Careers ...
The Hindu Business Line : IIPM placements hit a high of over 2000 jobs
Deccan Herald - IIPM ranked as top B-School in India
India eNews - IIPM Ranked No1 B-School in India
IIPM Delhi - Indian Institute of Planning and Management New Delhi ...
domain-b.com : IIPM ranked ahead of IIMs
IIPM makes business education truly global-Education-The Times of ...
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