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Dish TV India Limited Investor Presentation 2
Disclaimer Some of the statements made in this presentation are forward-looking statements and are based on the current beliefs, assumptions, expectations, estimates, objectives and projections of the directors and management of Dish TV India Limited about its business and the industry and markets in which it operates. These forward-looking statements include, without limitation, statements relating to revenues and earnings. The words “believe”, “anticipate”, “expect”, “estimate", "intend”, “project” and similar expressions are also intended to identify forward looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond the control of the Company and are difficult to predict. Consequently, actual results could differ materially from those expressed or forecast in the forward-looking statements as a result of, among other factors, changes in economic and market conditions, changes in the regulatory environment and other business and operational risks. Dish TV India Limited does not undertake to update these forward-looking statements to reflect events or circumstances that may arise after publication. 3
Investment rationale Poised to be the largest Media Company in India 1 Most exciting time in the history of the Company; significant merger synergies to 2 unfold. Maiden dividend declared At an inflection point; on course to deliver strong growth and margins 3 Buffered from disruptive technologies; supremacy amongst semi-urban and 3 rural consumers Forthcoming, powerful integration of in-house OTT with DTH to increase urban 4 stickiness Aiming to be debt free in around two years 5 Annuity business with significant Free Cash Flow potential 5 4
Poised to be the largest media company in India Total Re Revenues (Rs RsBn Bn.) Year ending 31 March 2018 75 66.9 62.4 57.2 50.3 50 37.6 29.6 23.0 23.7 23.3 25 15.4 12.9 0 Zee Dish TV India Ltd Tata Sky Network 18 Airtel Sun TV PVR D.B.Corp Jagran Hathway Den Networks Entertainment Media & Digital TV Network Prakashan Cable & Enterprises Investments Datacom EBITDA (Rs Rs Bn Bn.) Year ending 31 March 2018 21.0 20.8 19.7 18.2 20 14.2 12 5.8 5.6 4.3 3.5 2.8 4 1.9 (4) Sun TV Zee Dish TV India Ltd Tata Sky Airtel Jagran D.B.Corp PVR Hathway Den Networks Network18 Network Entertainment Digital TV Prakashan Cable & Media & Enterprises Datacom Investments 5 Source: Annual reports & company filings
Significant merger synergies to unfold ~700 mn Already realised in 1H FY 19 Interest cost ~1100 mn synergies Capex synergies ~3300 mn 5100 mn mn Revenue above synergies Merger EBITDA SAMPLE synergie ies level TEXT synergies SAMPLE TEXT Content & Backend administrative services & cost synergies call centre synergies 6
Supremacy amongst semi-urban and rural consumers Dish easiest to reach / Most economical for TV Inconvenient- viewing Watching Distributed linear TV on row houses mobile screens India outside Growing big cities Larger penetration of wireless family size broadband Negligible Unfeasible requirement to lay fibre/ for wired unlimited broadband broadband Dish TV India has majority of its subscr cribers outside top-towns and cities 7
Indian TV Industry 8
The Indian TV industry TV Industry Size (INR Bn.) INR 821 Bn. 2018 2018 2020 2020 2020P 2020 2020 821 920 TV subscription revenues Total households (in Mn Mn.) .) 298 298 311 311 CAGR of 8% 2018 702 761 197 197 220 220 Total TV households (in Mn Mn.) .) (2017-2020P) 71% 71% TV penetration (of total HH’s) 66% 66% 2017 646 665 83% 83% 84% 84% C&S Penetration (of TV HH’s) Subscription revenues Advertising revenues Mar arket share - Distribution Industry Broad adcas asting Industry Analog Multiple broadcasters, having 300 Digital Cable Cable pay channels, 577 FTA channels, 28% 39% producing content in more than 15 languages DTH 33% TV Industry to gain from incr creasing TV and Pay -TV penetration 9 Source: TV industry size: FICCI-KPMG 2017; Households: BARC India Universe Update 2018; Distribution Industry: MPA Report 2017
TV viewing in India Share of TV viewership universe across age groups TV continues to remain the most popular form of entertainment Senior Daily time (>50 years) Kids Daily tune in on TV: spent per 16% (2-14 years) 566 Mn Mn. . Individual als individual al 20% 03:4 :44:2 :28 (hh:mm :mm:s :ss) 14% Youth (15-30 years) Adults (31-40 yrs) 33% 17% Percentage of single TV households 79% of Indian households still 98% 98% 97% 97% 95% 95% have CRT TV’s Urban Rural All India 77% large and affluent joint families have single TV’s, implying co -viewing as a consumption pattern 10 Source: Percentage of single TV households: BARC
Popular across age groups despite rising internet penetration Share of TV viewership universe by age groups All India internet penetration- 30% (in Mn. impressions) Broadband subscribers (in Mn.) 2-14 yrs 400 22% 22% 345 Senior 350 Kids (>50 years) (2-14 years) 15-30 yrs 300 250 218 Mature 31-40 yrs 41-50 years 200 150 120 Youth 41-50 yrs (15-30 100 70.4 years) 40.7 50 16.5 18.1 17.9 14.5 15.3 51+ yrs 0 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 2017 2016 Wireless broadband subs (mn) Fixed broadband subs (mn) Contrary to popular perception, the youth contributes a massive 33% % share of TV viewership, and has seen a growth of 22% % in impressions over the year 11 Source: Share of TV viewership by, and across age groups: BARC
Pay - TV in India 12
An overview of the Pay - TV Industry TV households 197 Mn. Pay -TV TV Non - Pay 163 Mn. 34 Mn. Cable Subs DTH Subs Free Dish 109 Mn. 54 Mn. 22 Mn. 13 Source: TV & Pay – TV HH: BARC Universe Update 2018; Distribution by platform: MPA Report 2017; Free Dish subscriber base: MIB Annual Report, 2018
Asymmetry in the Pay - TV Industry DTH maximized gains from Digitization (initiated in 2012). Majority of cable additions were conversion from Analog to Digital Subscribers (in Mn.) 2011 2012 2013 2014 2015 2016 2017 2018 Net new additions by DTH 7.3 4.1 3.6 3.9 3.0 3.5 3.7 4.0 New digital additions by Cable 1.1 9.6 13.3 -1.5 9.7 13.5 10.2 6.9 Out of Which Analog seeding 0.0 7.6 11.5 0.0 8.2 12.1 9.0 5.8 Net new additions by Cable 1.1 2.0 1.9 -1.5 1.6 1.4 1.3 1.2 % of new additions by DTH 87% 67% 66% 100% 65% 72% 75% 78% % of new additions by Cable 13% 33% 34% 0% 35% 28% 25% 22% Despite having only a 33% market share, DTH contributes >53% of subscription revenues earned by broadcasters Cable DTH Subscriber market share (%) 67% 33% Content cost (INR Mn.) 50,938 56,982 Contribution towards subscription revenues of broadcasters 47% 53% TRAI Orders effective from July 3, 2018. Stakeholders have a period of 180 days to implement the provisions of the Order. Cable DTH Abysmally low content cost per subscr criber per month in cable is an ARPU dampener for the entire Pay - TV industry 14 Source: MPA Report 2017
Emergence of OTT The global OTT phenomenon Annual cost of Netflix 1/10th of Pay -TV cost in the US Low cost of OTT vs Pay -TV drove adoption 80 1,439 1,131 1,064 54 997 30 11 11 8 8 8 7 6 103 DirecTV Charter Dish Comcast Netflix USA Australia Sweden Mexico Nigeria Annual ARPU (USD) -2016 Pay TV monthly ARPU OTT monthly fee Low OTT costs compared to traditional Pay -TV platforms, led to higher adoption of OTT content globally The India exception Pay TV monthly ARPU Cost of OTT vs Pay -TV per month (in USD) Pricing (per month) of OTT services vis-à-vis cable and DTH 600 80 54 OTT monthly fee 210 180 30 11 11 8 8 8 7 8 6 3 Netflix Cable Pack DTH Basic packs USA Australia Sweden Mexico Nigeria India India is an exception to the global OTT phenomenon, with higher cost of OTT vs Pay -TV 15 Source: Cost of OTT vs Pay – TV: Digital TV Research; Annual cost of Netflix : Marymaker Internet Trends Report 2017, : Cost of OTT vs Pay – TV: Digital TV Research & internal est.; Pricing of OTT services : Market Estimates
IPTV as an offering Re Reali lity chec eck: k: Winnin ing IPTV subscrib iber ers. Is it as easy as gain inin ing tel elec ecom custome mers? Telecom IPTV Capex requirement Low Front loaded Physical Infrastructure requirement Low High Ground Task force Negligible Huge Overall cost of delivery Low Extremely high per home Distribution/reaching the last Through local shops/ retail stores Through existing operators having mile access to homes Pricing High existing data and voice costs Traditional C&S prices are too low to be supported aggressive undercutting susceptible to undercutting by new entrant Consumer experience/ novelty in Free voice and cheap data Nil ( Change in pipes only) offering as compared to existing service Potential reach of new technology Pan India Densely populated tier 1 cities Potential consumers Data starved & aspiring mobile Select consumers having extremely customers high data requirements 16
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