Dish TV's new offer no game changer - Anand Rathi

We believe Dish TV's new offer (basic service tier for free in metros) for new subscribers is mainly aimed at creating a marketing buzz to attract subscribers and reduce churn. We expect limited impact of this plan on industry pricing and competitive dynamics (vs. DTH peers, MSOs), as the offer implies limited change in customer outgo on connection/monthly fee for content needs similar to their existing ones. We expect no material customer down-trading due to habitual nature of TV content consumption and small share of wallet of TV entertainment.

- Offer details. Dish TV plans to offer basic service tier (55 free-to-air TV channels) for free (on condition of at least two monthly recharges of minimum Rs.200 twice a year) in four metros. Notably, the offer is available only to new subscribers. Earlier in the month, leading MSOs announced similar package (i.e. basic tier) at Rs.100 + taxes/month.

- Design rationale. We believe the plan is aimed at: (1) generating a marketing buzz to attract new customers; (2) reducing churn triggered by discontent over immediate switch-off of all channels on delays in monthly payments; and (3) assuring customers of at least partial continuity of services during the mandatory migration to digital platform.

- No game changer. Dish TV's plan implies no major change in: (1) cost of activation for new subscribers; and (2) monthly charges, as it is imperative for most customers to subscribe to pay packages, prices of which remain unchanged (basic tier leaves out most of the popular channels, Fig 1). The impact at margins could be in the form of: (1) small scale customer down-trading; (2) some increase in market share and reactivations of in-active subs of Dish TV (until competition respond); and (3) accelerated migration of non-pay TV subscribers to pay TV.

- Our take. We retain Buy on Dish TV and Hathway Cable and Datacom, as we expect these two to benefit from digitalisation of cable TV. However, post the recent rally in share prices (10% and 21% in the past two months, Fig 2), we would look for a better entry point.

Source : Equity Bulls

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