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Cable TV subscription drives Hathway revenue growth in Q1 FY 2020

First full quarter numbers after New Tariff Order implementation

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BENAGLURU: Hathway Cable and Datacom Ltd (Hathway) reported 38 percent growth in subscription revenue from its cable TV business (CATV) for the quarter ended 30 June 2019 (Q1 2020, quarter or period under review) as compared to the corresponding year ago quarter (y-o-y) Q1 2019. CATV subscription revenue for Q1 2020 grew 28 percent as compared to the immediate trailing quarter Q4 2019 (q-o-q). CATV subscription revenues for the period under review, the corresponding year ago quarter and the immediate trailing quarter were Rs 216.7 crore, Rs 157.4 crore and Rs 169.9 crore respectively.

Placement revenue in Q1 2020 grew 5 percent y-o-y to Rs 78.7 crore from 75.2 crore and grew 35 percent q-o-q from Rs 58.2 crore. Activation revenue declined 13 percent y-o-y to Rs 15.3 crore from Rs 17.6 crore and declined 3 percent q-o-q from Rs 15.7 crore. The split of placement and activation revenues for iCATV and Broadband business has not  been mentioned.

Overall, CATV business revenue in Q1 2020 grew 24 percent y-o-y to Rs 315.97 crore from Rs 254.91 crore and grew 27.1 percent q-o-q from Rs 248.51 crore. The company reported an operating profit (segment result) of Rs 2.82 crore from CATV business for Q1 2020 as compared to an operating loss of Rs 31.16 crore in Q1 2019 and an operating loss of Rs 333.89 crore for Q4 2019. The high losses for Q4 2019 were due to exceptional items to the extent of Rs 410.74 that included impairment of trade receivables, advances and exposure to certain entities including joint ventures, write down to property plants and equipment and expenses relating to equity infusion. The exceptional items for Q4 2019 were a one time expense and had non-routine material impact on financial statements says the company. Q1 2020 is the first full quarter after the implementation of Telecom Regulatory Authority of India (TRAI) New Tariff Order.

Comparatively, the broadband business revenue of the country’s now fourth largest wired broadband internet services provider grew 3.1 percent y-o-y and 1 percent q-o-q. Hathway reported Rs 133.81 crore, Rs 129.8 crore and Rs 132.43 crore as broadband revenue for Q1 2020, Q1 2019 and Q4 2019 respectively. Hathway reported less than half the operating profit (segment result) from its Broadband business at Rs 9.14 crore for Q1 2020 as compared to an operating profit of Rs 19.89 crore for Q1 2019. The company had reported an operating loss of Rs 18.11 crore for the immediate trailing quarter from its broadband business.

The company says that it has deployed 60 lakh (6 million, 0.06 crore) set top boxes and claims 8.4 lakh (0.84 million, 0.084 crore) broadband internet subscriber base at the end of the quarter under review in an investor presentation. Comparative broadband subscribers for Q1 2019 and Q4 2019 were 7.7 lakh (0.77 million, 0.077 crore) and 8.1 lakh (0.81 million, 0.081 crore) respectively. While data consumption per user has gone up, broadband ARPU has declined in Q1 2020 to Rs 650 in Q1 2020 from Rs 690 in Q1 2019 and from Rs 662 in Q4 2019. It says further that FTTH markets will be leading growth in customer acquisition and that its focus will be on doubling net additions momentum Q2 2020 onward.

Let us look at the other numbers reported by the company

All numbers in this report are consolidated unless stated otherwise.

Hathway’s total operating revenue for Q1 2020 grew 16.9 percent y-o-y to Rs 449.78 crore from Rs 384.71 crore and grew 18 percent q-o-q from Rs 381.04 crore. Total income or revenue for Q1 2020 grew 29.2 percent y-o-y to Rs 506.68 crore from Rs 392.18 crore and grew 20 percent q-o-q from Rs 422.10 crore. The company reported a loss of Rs 9.38 crore for Q1 2020 as compared to a loss of Rs 51.72 crore for Q1 2019 and profit after taxes (PAT) of Rs 6.61 crore in Q4 2019.

The company reported EBITDA growth of 15 percent y-o-y in its investor presentation for Q1 2020 to Rs 104.38 crore (23.2 percent margin) from Rs 90.5 crore (23.5 percent margin) and growth of 37 percent q-o-q from Rs 76.1 crore (20 percent margin). Simple EBITDA calculated from the company’s numbers reported to the bourses was Rs 93.14 crore (20.7 percent margin) for Q1 2020 which was 30.6 percent higher y-o-y than Rs 71.32 crore (18.5 percent margin) reported for Q1 2019 and was 11.2 percent more than the Rs 83.73 crore (22 percent margin) for Q4 2019.

Total expenditure in Q1 2020 grew 16.1 percent y-o-y  to Rs 519.61 crore from Rs 447.52 crore and grew 19.2 percent from Rs 435.97 crore.

Pay channel cost during the period under review declined 15.5 percent y-o-y to Rs 130.06 crore from Rs 153.88 crore and declined 1 percent q-o-q from Rs 131.41 crore. Employee cost in Q1 2020 grew 15.6 percent y-o-y to Rs 23.63 crore from Rs 20.45 crore and grew 6.3 percent q-o-q from Rs 22.22 crore. Operational cost in Q1 2020 grew 29.6 percent y-o-y to Rs 77.13 crore from Rs 59.51 crore and grew 16.5 percent q-o-q from Rs 66.23 crore. Finance cost grew 58.7 percent y-o-y to Rs 81.79 crore from Rs 51.53 crore and grew 47.7 percent q-o-q from Rs 83.28 crore. Other expenses in Q1 2020 grew 58.2 percent y-o-y to Rs 125.82 crore from Rs 79.55 crore and grew 62.5 percent q-o-q from Rs 77.45 crore.

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