DTH companies expected to recover close to pre-pandemic levels

Despite tariff hikes, India’s direct-to-home (DTH) companies are expected to recover only 85% of their pre-pandemic revenue levels, according to a report by Crisil. The report (via TOI) highlights that the recent tariff hike by DTH operators is expected to contribute to a 6-8% growth in their revenue to approximately Rs 19,500 crore in fiscal 2024, which is close to 95% of what was generated in fiscal 2020.

DTH companies have implemented the amended New Tariff Order (NTO) from February 1, 2023, leading to tariff hikes. Over the past three fiscal years, there were regulatory constraints on hiking tariffs, even as subscriptions declined. DTH sector is facing a lot of competition from cable TV operators and free Dish. This is going to affect its ability to add new users faster.

Crisil’s analysis of rated DTH companies indicates that the sector’s monthly average revenue per user (ARPU) is expected to grow 7-8% to around Rs 300-305 this fiscal year. This growth is likely to boost the sector’s revenue, though it will still be about 5% short of the fiscal 2020 levels. Over the next few years, the sector is expected to grow moderately, driven by expectations of further revisions in tariffs.

Top DTH companies in India include Tata Play, Dish TV, Airtel, Sun Direct, and Reliance Jio DTH. However, DTH operators face increasing competition from cable distributors as well as alternative digital and over-the-top (OTT) platforms that offer on-demand content. Some affluent subscribers are switching to these platforms to consume entertainment on mobile phone screens because of convenience. It will be a tough journey for the DTH operators in the near future.

Overall, despite the challenges posed by competition and changing consumer preferences, the DTH sector is set to rebound close to pre-pandemic levels and continue to grow moderately in the coming years. Telecom Talk