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  • Interview with Harvinderjit Bhatia, CFO, Digicable, India
    Friday, July 02, 2010
    In this new feature on tiCorridors.com we speak with CxOs of major organisations on where they think the economy is heading and their pertinent views on the economic activity in the India-UK corridor.
In this new feature on tiCorridors.com we speak with CxOs of major organisations on where they think the economy is heading and their pertinent views on the economic activity in the India-UK corridor.

In the inaugural feature we present excerpts from discussions with Mr. Harvinderjit Bhatia, Chief Financial Officer of Digicable, India’s fastest growing cable company. www.digicable.in


 
On Digital and cable industry

Q1. What’s currently happening in your industry?
The Indian pay TV and broadband industry is expected to continue to be the second largest in Asia Pac in terms of number of subscribers. It had 85m subscribers in 2007 and is expected to have 144m and 173m subscribers in 2012 and 2017 respectively. Only China remains ahead of India which is expected to reach 414m subscribers by 2017.

In revenue terms, it is expected to be the third largest in Asia Pac region, clocking USD 5.7bn in 2007 and, is expected to reach USD 12.3b and USD 19.9b in 2012 and 2017 respectively. China and Japan are ahead of India who are expected to reach to USD 38.6b and USD 26.3b of revenues by 2017 respectively.

Q2.  Where will growth come from?
Major growth in India is being provided by the digital penetration wave which, now, is picking up rapidly and has gone from zero to almost 15m subscribers in a short space of time. The growth in the Indian digital market will outstrip growth in the key Asia Pac markets. It is expected to grow at a CAGR of 60% in the next 5 years and at 30% in the next 10 years. The digital penetration is likely to increase from 5% of total pay-tv subscribers to 33% by 2017.

New technologies like HITS will extend cable penetration into “cable dark” areas.
 
Q3. What are the key reasons for this growth?
The main reason for this growth is the huge base of 83m cable & Satellite households out of a total of 124m TV households, which is only 50% of the total households of 215m households. Other reasons include consolidation in cable industry and corporatization; that is boosting the digital network upgrade, growth in DTH (Direct to Home) subscription and emergence of IPTV.

Indian industry will follow the pattern of the growth of the US industry however it will grow at a faster pace than that of the US only 10 yrs later.
 
Q4. What challenges are you likely to face in the future?
Cable operators need to optimize on-demand platform. It is a subscriber retention tool for them whereas the networks use it as a lab to test new content ideas. The industry collectively also needs to develop new revenue streams otherwise it will stagnate with plethora of channels coming up ever and anon.

Technologies such as VoIP (Voice over IP), HDTV and wireless services need to be exploited further. Additionally increasing competition in multi-channel video market is putting a squeeze on margins. Operators have to provide more value added services through increased customer services and form new partnerships and alliances.

Q6. How is Digicable planning to mitigate these threats?
Our goal is to become the top player with bundled and value-added services. We cannot compete on a commodity item. Mobile phone minutes became a commodity and so will the bundled digital-content.  We are looking to develop new frameworks and technologies to increase user-interaction.
 
Q7. Can you give a few examples?
Interactive services like gaming, internet on cable, yellow pages, e – commerce, VOD, Push VOD (Video on Demand) etc.
 
Q8. What are the unique characteristics of the Indian market?
The Indian market is rather unique. It has abundant overhead fibre to the kerb in all key cities. The number of channels already operating in India is over 400 with another 200 to be added in the next 3 yrs. Other key characteristic is that the sector is still largely unorganized with only 10 of the 7000 MSOs (Multiple System Operator) behaving like organized corporate.

The problem is even worse with the 60,000+ LCOs (Local Cable Operator) most of which operate as mom & pop stress. However they have monopoly over the most significant revenue streams since they control the last mile connectivity. 

The consumer is worse off getting absolutely no choice and a very poor service in the analog segment.
 
Q9. Where do you see opportunities in India?
The Indian market offers opportunities at multiple levels. Firstly, the sheer size of the Indian viewer base: 83 million C&S households with multiple television sets, high discretionary spending and a young population.

Secondly, there are a lot of inefficiencies in the Indian market and in particular the key is to unlock the maximum value which is currently captured by the LCO. Today LCOs control 80% of the revenue share with the rest split by others in the value chain. The average consumer spending is Rs 180p/m; of which 13% is controlled by broadcaster, 2% by broadcast syndicators, 5% by MSOs and 80% by LCOs. The opportunity is to find ways to create a more equitable and balanced revenue sharing field. For a very long time the industry has been skewed in favour of LCOs but that is beginning to change very quickly.

Lastly, the most important area where we see major growth is the shift from analog to digital. Digital penetration is expected to go up to 33% due to the implementation of CAS (Conditional Access System), launch of DTH services; lowering in prices of digital TVs is also boosting demand. Value added services like VOD, Internet on Cable and Gaming etc. will be the key revenue drivers in the Indian cable markets
 
Short and Sharp

Q10. Do you feel that the current economy is on its course?
Very much so. Internal growth is extremely robust but inflation is a huge concern.
 
Q11. What do you make of the recent price controls in fuel industry?
Tough on consumers but it is necessary to improve the health of the fiscal balance sheet.
 
Q12. Take on Indian stock market?
Another bubble in the making.
 
On the India-UK Economic linkages

Q13. What do you make of the Indo-British economic relationship?
The relationship seems fine, but I am surprised at the trade and investment figures. They could certainly do better. I think UK investors and companies need to be more visible and aggressive in markets such as India.
 
Q14. Do you think the recent cap on immigration announced by British Government is likely to deter Indian investment into the UK?
Yes, most definitively. It will hurt the UK financial services industry even more.
 
Q15. One thing that Indian and UK Government should do to improve their economic relationships.
Support the new generation of entrepreneurs. I don’t mean kids coming out of colleges, but those outside the big families. These are the next world leaders and their aspirations are global. They are hungry to make their presence felt across the world and not just in India. The Indian economy will certainly benefit with their progress. The UK will also benefit if they choose to locate their global headquarters in London or elsewhere in the country. Today, most of them are very US centric.
 
Things that are quintessentially British

Q16. Favourite restaurant in London
Benaras on Berkeley Square…
 
Q17. Favourite British icon
James Bond
 
Q18. Favourite spot in Britain
Just outside Buckingham Palace
 
Life & Style

Q19. Favourite airline to and fro from UK
Kingfisher
 
Q20. All time favourite gadget
Past:  Atari   Current: iphone
 
Q21.  Tea or Coffee
Tea, without a doubt
 
Q22.  Sundays
Home, food and friends….
 
 

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