Mandatory digitisation beneficial for Indian cable industry
Moneylife Digital Team 28 December 2011

The compulsory digitisation will pave the way out for economic retention for the sector which is highly fragmented due analog mode of distribution.

Once the mandatory digitisation of the cable television materializes, the Indian Cable and Satellite industry (C&S) will be benefited by gaining double digital subscriber base, say experts. They believe that players like Dish TV, Den Network, and Dish TV will huge business opportunities.
The Cable Television Networks (Regulation) Amendment Bill 2011 was passed by the Lok Sabha on 13th December with aim of digitising the cable sector by the end of 2014.  Apart from compulsory digitisation, the amendment include efficient registration of cable operators, mandatory transmission of some TV channels, inspection of cable network services and usage of standard equipment among others. TRAI will regulate the service tier and the tariff.
Indian C&S industry is the third largest in world with around 136 million homes having cable or satellite TV. According to report by PINC Research, Going forward digital subscriber base in India is expected to rise to 83 million by 2015 from 47 million at present, at 21% compounded annual growth rate (CAGR).

An analyst tracking the sector from a Mumbai-based broking firm says that, “Out of the 123 million households having cable TV, 88 million are using analog platform. So the opportunity is huge as all of them would be converted to digital platform. In my sense, in the first phase itself, around 20-22 million customers will benefit from the move. Both multi system operators (MSOs) and direct to home (DTH) players will have incremental customer base. Though, one has to wait and watch to see, who among the incumbents wins.”
Currently the sector faces has high competition from the local cable operator (LCO), who often under report the customer base. “Digitisation is bound to reduce the incidence of under-reporting – the bane of the Indian C&S industry.  High operating leverage business model will be the key driver for organised cable players and DTH operators in magnifying their operating margins. We see major players in DTH segment and organized MSOs to breakeven by 2013,” says the PINC report.
The compulsory digitisation will pave the way out for economic retention for the sector which is highly fragmented due analog mode of distribution.
Earlier IDFC Securities, in a research report had said, “We believe that the regulatory trigger will change the TV distribution industry dynamics from here on. Our sense is that while both MSOs as well as DTH players will capitalise on the mandatory digitised environment, the delta gains will be far sharper for nationalised MSOs such as DEN and Hathway. Against a backdrop of extremely poor execution and muted subscriber addition of less than 0.5 million subscribers annually, we now foresee a near 3x jump in digital subscriber addition for these MSOs in the next 12-18 months.”

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