Author Topic: VDTH - Videocon  (Read 41169 times)

muscleman

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Re: VDTH - Videocon
« Reply #20 on: February 19, 2016, 08:04:37 AM »
http://www.broadcastandcablesat.co.in/digitization-of-cable-tv-systems.html

A must read for anyone interested in India cable and DTH industries.


muscleman

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Re: VDTH - Videocon
« Reply #21 on: February 19, 2016, 08:15:46 AM »
muscleman-  every DTH operator in India leases their satellites.  (I believe this is typically the case in most countries as well.)  They currently are leasing ST-2, which is a fairly new satellite operated by SingTel.  It's difficult for companies in India to get satellite capacity due to government red-tape, and other operators sometimes have older, crappier satellites, e.g. TataSky, which is spending tons of capex to upgrade all their subs to MPEG4 STBs in order to overcome the capacity limitations of their satellite (Videocon's subs have been on MPEG4 STBs from the beginning, in addition to having a better satellite.)

Like most every DTH operator, Videocon found its balance sheet stretched by a subscriber landgrab that took place around fall 2012 thru fall 2013.  The IPO fully addressed all debt issues.  Today their net debt/TTM ebitda is around 2x and should rapidly decline from there.

I looked at most of their SEC filings, but there is no cash flow reports other than the 20-F. I am surprised that they don't give out quarterly cash flow statements.
Regarding the IRR: I think it is high but don't know exactly how high it is. They set the depreciation of their primary asset(Consumer premise equipment) to be 7 years straight line. They are growing fast AND their adjusted EBITDA - capex is turning black in just 3 years, so that likely tells us that IRR is high.

I think the primary risks here are corporate governance and accounting fraud.

muscleman

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Re: VDTH - Videocon
« Reply #22 on: February 23, 2016, 08:36:36 AM »
Does anyone know why there is a big discrepancy between net subscribers of 11 million and gross subscribers of 14.9 million?
I found a message on VIC explaning what is net sub vs gross sub "net subs added are gross subs added less those who churned out in the period. "
http://www.valueinvestorsclub.com/idea/VIDEOCON_D2H_LTD__-ADR/136577#messages

However, if the churn rate is only 0.7%, how can the net sub vs gross sub have such a big discrepancy?  ::)

usdtor05

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Re: VDTH - Videocon
« Reply #23 on: February 23, 2016, 12:07:59 PM »
gross is anyone ever that got a box. they dont take the boxes back. churn is .7%/month so over 5 years it adds up.

muscleman

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Re: VDTH - Videocon
« Reply #24 on: February 24, 2016, 08:38:40 PM »
I am comparing the financials with Dish TV India.
http://www.dishtv.in/App_Documents/Reports/Earnings-Release-for-the-Quarter-Ended-December-31-2015.pdf

Dish TV India's Depreciation is 18% of revenue while Videocon's is 20%. Videocon's APRU is 211 INR while Dish TV IN's APRU is 170.
So Videocon's making consumer premise devices in-house and has a much higher APRU. How come the Depreciation/Revenue ratio is higher than Dish TV India?

Does anyone know?

Also Dish TV's per quarter financing cost is over 500 million. Its debt is only 5.6 bn so how can the financial expense be so high?

I am trying to compare all the india DTH companies right now to see if there is any financial gimmicks with VDTH.
My biggest fear is that they fake everything including cash in their bank account, like the US listed Chinese reverse mergers back in 2011 (CCME, PUDA and a few others).
« Last Edit: February 24, 2016, 08:44:33 PM by muscleman »

misterkrusty

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Re: VDTH - Videocon
« Reply #25 on: February 24, 2016, 08:49:59 PM »
first, check dish tv's depreciation schedule.  could be different from the 7 year depreciation for STBs that videocon uses.  second, videocon generally sells more expensive (higher quality) STBs than dish tv.  I think that 170 figure for dish tv is subscription revenue only, whereas videocon and the rest of them typically include some activation revenues in ARPU. 

TataSky probaably has the highest ARPU, then videocon, then airtel digital, then dish tv.

Alex.N.B

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Re: VDTH - Videocon
« Reply #26 on: March 09, 2016, 05:13:56 PM »
I believe VDTH just presented at the DB TMT conference in Palm Beach, just wondering if anyone had any insights from the conference?

Thanks!
A

kab60

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Re: VDTH - Videocon
« Reply #27 on: March 14, 2016, 09:26:54 AM »
They just announced a pretty substantial price increase of Rs. 20 or around 10 percent - http://ir.videocond2h.com/file/Index?KeyFile=33373868.

lotus

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Re: VDTH - Videocon
« Reply #28 on: March 22, 2016, 06:07:23 PM »
Is there any risk of cable providers dropping prices to compete with the shift to satellite? Surely, they won't go out of business without a fight. As I understand it, there is a minimal spread between satellite and cable costs due to the historical competition. Additionally, with the LCO market so fragmented, has that industry already competed prices down as far as they can go? Is there risk as satellite pricing grows that the market share shift will slow or is the regulatory tailwind enough to counter this?

Also, any risk from Facebook providing free Internet to everyone?

misterkrusty

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Re: VDTH - Videocon
« Reply #29 on: March 22, 2016, 07:25:51 PM »
I don't think the MSOs have much room at all to drop prices - look at their margins/ leverage/ returns on capital ... all terrible.

The LCOs are local monopolies, more or less, and they are "over-earning" vs MSOs and broadcasters - i.e. capturing more of each subscribers cable bill than they "deserve" based on value added.  This will change with digitalization but probably over many years.

I think the DTH players are behaving like a rational oligopoly at this point.  Certainly they weren't back around 2011, but the number of players has (for all intents and purposes) been whittled down from 6 to 4, each with their own spot along the pricing spectrum.  so while it's possible that price hikes slow growth, I don't think the players will hike prices so much that the increase in margin comes at the expense of overall NPV.  They've been hiking in-line with inflation (~6.5%) for several years now yet have still grown at a good pace. 

Note that the DTH guys have not hiked pricing on their lowest tier packages, given lower incomes in much of phase 3-4.  also note that the margins on low-end packs and high-end packs are basically the same.

Facebook's "free basics" was banned in India due to violation of net-neutrality.  Now they're talking about solar-powered drones with (frickin') laser beams.  We'll see.  Microsoft's Project Whitespace and Google's Project Loon have each run into problems with the gov't, and we still don't know if the technology will actually work on such a large scale.  Also - even if it does come to fruition, Project Loon internet won't be free, despite what some older articles have said.