Hathway Cable and Datacom has incurred a Capex of Rs 230 crore on broadband and cable TV business in the first nine months of FY18. The company spent Rs 160 crore on broadband while cable TV consumed Rs 70 crore.
This information was provided the company’s top management during a conference call with analysts.
Talking about the broadband Capex, Hathway Cable and Datacom MD Rajan Gupta said that the last nine months was all about building strengths for future.
The Capex was incurred on customer additions, enhancing data centre, and upgrading rings in the city to offer consumers 200 Mbps speed. “So there is a lot of onetime capex, which has been spent to make sure we are ready for the future so that is one the broadband piece,” Gupta told analysts.
On the future plans for broadband, Gupta said that there is no plan to enter new cities. The company’s focus is on top 12 cities where it will continue to expand aggressively. He also said that the EBITDA growth in the next few quarters will be higher than the revenue growth.
“For next three to four quarters we do not have any plan for expanding any number of towns, few towns here and there will get added, so next few quarters we will definitely see EBITDA growth higher than the revenue growth, which means the current EBITDA will keep on growing higher,” he stated.
As far as the challenge from telecom operators is concerned, the company plans to offer add-ons to its broadband customers to retain them.
Gupta believes that the disruption created by the entry of Reliance Jio and the ensuing competition among telecom players will continue for the next four quarters. He noted that Hathway has been growing its revenue and EBITDA despite the competition from telcos.
“Profitability is not a concern in the broadband business. So for next few quarters to come we will keep on using value add-ons to ring fence all our high ARPU customers and obviously over a period of time all the verticals will drive their own revenue,” he averred.
Queried about the possibility of bundling cable TV and broadband services, Gupta stated that the two services will be offered separately due to regulatory issues.
He further noted that the home pass strategy was to drive 20% penetration as far as old home passes is concerned which the company has already achieved with 7.5 lakh customers on a base of 5 million homes passed.
“For the entire old home pass we are already 20% and the second thing is licensing is very different for both video and broadband. Video is essentially MIB license and broadband is telecom DoT license. Registration is different for both, so considering those regulatory issues, we would like to keep it separate as of now,” he said.
Gupta is also bullish about the cable TV business. The key levers of growth in this business are inflation-linked ARPU increase in digital addressable system (DAS) Phase I and II markets, ARPU in DAS Phase III and IV markets will be similar to Phase II, and growth in high definition (HD) customers.
Going forward, Hathway will focus on consumer segmentation to drive revenue growth. The plan is to segment around 1 million consumers with greater propensity to spend and delight them through HD, hybrid boxes and connected STBs.
“Currently, I can say essentially by March 2019 we should move big time in that direction, I cannot put an exact number, but March 2019 we should have phase III, phase IV ARPUs pretty much near the current phase II levels of ARPU,” he said.
The implementation of Hathway Connect initiative has helped the company to increase its collection efficiency which is currently in the range of 97-98%.
“Now a big part of implementation has already happened. All the markets where we are market leaders or we are number two, the implementation is already complete. Parts of phase IV and parts of northern markets where we are not market leaders, implementation will happen over a period,” Gupta stated.