Release Date: July 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- GTPL Hathway Ltd (BOM:540602, Financial) is steadily approaching a milestone of 10 million subscribers in the cable TV division.
- The broadband segment has performed well, with a 7% increase in active subscribers year-over-year.
- The company has implemented several tech solutions, including the GTPL interactive app and GenieATM, to enhance customer experience and operational efficiency.
- Collaboration with Samsung and Nagra for the TVKey Cloud product allows users to access linear TV content on connected TVs without additional hardware.
- Total revenue grew by 9% year-over-year to INR 8,506 million, with subscription revenue increasing by 7% year-over-year.
Negative Points
- Interest costs have risen due to greater utilization of limits and costs associated with LC facilities and BGs.
- Depreciation is expected to increase by INR 25 crore to INR 30 crore over the next two years due to ongoing CapEx.
- Operating expenses have significantly increased, leading to negative operating leverage.
- The broadband business has seen a slowdown in subscriber additions, with growth now in mid-single digits.
- The company has faced challenges in maintaining EBITDA margins, with current margins below the previously guided 20%.
Q & A Highlights
Q: Can you share the reason why our finance cost has increased sharply? Are there any credit lines we are drawing, and what about debt repayment timing?
A: The interest cost has risen due to greater utilization of limits and the cost of LC facilities and BGs. Additionally, finance costs include operating lease costs as per IND AS 116. Overall borrowings have decreased by almost INR 4.5 crore due to repayment of long-term borrowings. We aim to keep borrowings within reasonable levels going forward. (Saurav Banerjee, CFO)
Q: What is the expected level of depreciation given the current CapEx?
A: Depreciation has increased from INR 90 crore to INR 91 crore. With an annual CapEx of INR 350 crore to INR 400 crore, we expect an additional INR 25 crore to INR 30 crore in depreciation annually for the next two years, after which it will start to decline. (Saurav Banerjee, CFO)
Q: How should we look at the business given the soft top-line growth and increasing expenses?
A: Variable costs rise with revenue, and some fixed costs were incurred in anticipation of business expansion. We are taking corrective actions to prune costs where expansion is not possible. The broadband business has more variable costs due to the B2B vertical. We are hopeful that churn will decrease and subscriber additions will increase in new states. (Saurav Banerjee, CFO; Aniruddhasinhji Jadeja, Managing Director)
Q: What is the guidance for EBITDA margins and revenue growth for FY25?
A: We aim to maintain an operating EBITDA margin of 24% to 25%. Revenue growth is expected to be in the double digits for subscription revenue, and overall revenue growth should be similar to previous years. (Aniruddhasinhji Jadeja, Managing Director)
Q: Can you explain the TVKey Cloud product and its potential impact?
A: TVKey Cloud allows users to access GTPL's cable TV services directly on Samsung TVs without a set-top box. The initial response has been positive, and we are targeting a market of over 10 million Samsung TV users. We may consider expanding to other OEMs based on the response. (Aniruddhasinhji Jadeja, Managing Director)
Q: What is the split of new broadband subscribers between B2B and B2C routes?
A: Out of 10,000 new subscribers, 7,000 are from the B2B route and 3,000 from the B2C route. We are strategically expanding B2B in states where we have a cable presence. (Aniruddhasinhji Jadeja, Managing Director)
Q: How has the increase in mobile data prices affected your broadband business?
A: Our broadband ARPU has remained stable at INR 460. We plan to increase prices by adding more services and offering bundled packages. We have seen increased inquiries due to higher mobile data prices. (Aniruddhasinhji Jadeja, Managing Director)
Q: What are the trigger points for revenue growth and margin improvement?
A: ARPU increases will directly impact margins. We plan to implement ARPU increases in strategic markets and reduce one-time costs to improve margins. (Aniruddhasinhji Jadeja, Managing Director)
Q: Can you explain the rise in other expenses for this quarter?
A: The rise in expenses is due to infrastructure and bandwidth costs in anticipation of expansion, increased B2B commission costs, and a one-time provision for a broadcaster. We are taking steps to manage these costs. (Aniruddhasinhji Jadeja, Managing Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
