In your interest.
Online Personal Finance Magazine
No beating about the bush.
Hathway Cable & Datacom, a multi-system operator, has filed a draft red herring prospectus for its IPO. Akshay Raheja, non-executive director, spoke to Pallabika Ganguly of Moneylife about his investment plans and growth strategies for the company.
Pallabika Ganguly (ML): How are you going to deploy the funds that you are raising through your IPO (initial public offer)?
Akshay Raheja (AR): We are raising Rs600 crore to Rs625 crore through an issue of 27.75 million shares, including fresh inclusion of 20 million shares and sale of 7 million shares by promoters and investors. Approximately Rs130 crore will be invested in set-top boxes and related infrastructure; around Rs 234 crore will be spent on acquisitions; Rs85 crore will be set aside for broadband (growth) and about Rs96 crore will be utilised for debt reduction.
ML: What was your net revenue during FY08-09, and what was your EBITDA?
AR: We had net revenue of Rs672 crore and EBITDA of Rs103 crore (for FY08-09). We managed to double our EBITDA margin—from 7.2% in FY07-08 to 15.4% in FY08-09.
ML: What is your market share in the digital cable TV and broadband market?
AR: We hold 48% of the market share in the digital cable TV segment. On the cable broadband side, we enjoy 50% market share.
ML: How do you plan to compete with DTH (direct-to-home) service providers?
AR: With the entry of DTH services, local cable operators want help from MSOs (multi-system operators) like us. We are always ready to partner with local cable operators and invest in them so that we can stop subscribers from migrating to DTH players. I can also expand my market share by acquiring local players. Our service is as good as that of any other global DTH operator.
ML: What is your subscriber base? How do you plan to increase it?
AR: We have around 9.7 lakh subscribers, of which around 3.3 lakh are from the metros, in areas like South Mumbai, South Delhi and Kolkata. Most of our other subscribers are from tier-II cities like Hyderabad, Bhopal, Indore and Ahmedabad. Our strategy will be to acquire local cable operators who are facing a threat from DTH players, or to partner with these operators and provide them with our technology and set-top boxes so that they can retain their customers. Our partnership deals differ from client to client. We either acquire these operators or we enter into 50% partnerships with them.
ML: How much have you grown in the set-top box segment?
AR: The number of installed set-top boxes has increased to 9.7 lakh units from around 2.8 lakh at the end of FY07-08. And our broadband subscriber base has increased to 3.34 lakh from 1.24 lakh in March 2008 .
ML: What about your content cost?
AR: Our content cost was 59% of total revenues in FY07-08, but it dropped to 52% in FY08-09.
– Pallabika Ganguly [email protected]