GTPLNSEQ1 FY2023July 19, 2022

GTPL Hathway Limited

6,156words

109turns

11analyst exchanges

5executives

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Management on call

Pulkit Chawla

EMKAY GLOBAL FINANCIAL SERVICES

Anirudhsinh Jadeja

PROMOTER & MANAGING

Rajan Gupta

CHAIRMAN & NON-EXECUTIVE

Piyush Pankaj

BUSINESS HEAD CATV & CHIEF

Anil Bothra

CHIEF FINANCIAL OFFICER – GTPL HATHWAY LIMITED

Key numbers — 40 extracted

2.3x

ue for its stakeholders over past six years with a growth of digital cable TV subscribers base by 2.3x and broadband subscriber base by 4.8x. We are a dividend paying company from last six years and m

4.8x

years with a growth of digital cable TV subscribers base by 2.3x and broadband subscriber base by 4.8x. We are a dividend paying company from last six years and maintaining our net-debt free status.

8.4 million

4 as compared to the 2021 listing. Our CATV active subscriber base as on June 30, 2022, stands at 8.4 million and paying subscribers at 7.8 million. On Y-o-Y basis the increase in active and paying CATV su

7.8 million

CATV active subscriber base as on June 30, 2022, stands at 8.4 million and paying subscribers at 7.8 million. On Y-o-Y basis the increase in active and paying CATV subscribers is 400k and 500k, respectively

4.85 million

55k net subscribers on a Y-o-Y basis and 29k net subscribers on a Q-o-Q basis. Home pass stood at 4.85 million as on June 30, 2022, an addition of 750k Y-o-Y. ARPU stood at ₹ 450. The average data consumption

₹ 450

is. Home pass stood at 4.85 million as on June 30, 2022, an addition of 750k Y-o-Y. ARPU stood at ₹ 450. The average data consumption per customer stands at 260 GB per month per customer, an increase o

17%

The average data consumption per customer stands at 260 GB per month per customer, an increase of 17% from last year. Moving onto the financial performance on a consolidated level excluding EPC contr

10%

inancial performance on a consolidated level excluding EPC contract in Q1 FY2023, revenue grew by 10% Y-o-Y to ₹ 6,454 million. The CATV subscription revenue stood at ₹ 2,727 million up by 3% Y-o-Y.

₹ 6,454 million

ormance on a consolidated level excluding EPC contract in Q1 FY2023, revenue grew by 10% Y-o-Y to ₹ 6,454 million. The CATV subscription revenue stood at ₹ 2,727 million up by 3% Y-o-Y. The broadband segment del

₹ 2,727 million

Q1 FY2023, revenue grew by 10% Y-o-Y to ₹ 6,454 million. The CATV subscription revenue stood at ₹ 2,727 million up by 3% Y-o-Y. The broadband segment delivered robust growth of 24% Y-o-Y and the revenue stands

rew by 10% Y-o-Y to ₹ 6,454 million. The CATV subscription revenue stood at ₹ 2,727 million up by 3% Y-o-Y. The broadband segment delivered robust growth of 24% Y-o-Y and the revenue stands at ₹ 1,1

24%

revenue stood at ₹ 2,727 million up by 3% Y-o-Y. The broadband segment delivered robust growth of 24% Y-o-Y and the revenue stands at ₹ 1,139 million led by healthy subscriber additions. Consolidated

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Guidance — 17 items

Amitabh

“Any guidance on that for example our 29000 will become a lakh per quarter something like that you are having some projections?”

Piyush Pankaj

“But yes we are expecting that the growth will be there, the good growth will be there.”

Shailendra

“How much are those provisions can you say we may not expect in future how much is the quantum?”

Piyush Pankaj

“Further we also plan to offer the OTT bundles to our broadband customers and existing cable TV customers in their regular subscription plan.”

Arjun Shah

“On the cable TV front we saw margins shrinking a bit this quarter is that something we expect to continue in the future, or it also has a lot to do with depreciation I assume that other factors as well in the provision, is there anything else that we should keep an eye on?”

Hardik Jain

“But I do not want you to give us a guidance but if you can share us what is your aspiration, how many customers, how are you preparing the organization, how many customers as an organization you want to reach in broadband say in the next three years from 8 lakh odd numbers today, do we see ourselves reaching 15 lakh, 20 lakh customers in the next three to four years?”

Piyush Pankaj

“So, in that way we are hopeful, or we are confident that the addition numbers will be on the same trend as we were doing from last three to four years.”

Rajan Gupta

“We have done a project also sometimes back which means that up to every panchayat, fiber is there, the only issue is that the whole homepass has to be created.”

Parth Kotak

“Sir my last question is our revenue from EPC contract is zero do we expect it to remain zero for the coming years or how do we see it?”

Piyush Pankaj

“Yes, EPC contract is a one-time contract which we did for GFGNL which is Bharat Net project.”

Risks & concerns — 2 flagged

No cost pressure on the set top box side, whatever pressure was there in the last year because of the chip availability, no pressure is there right now.

— Piyush Pankaj

So, if you take the O&M costs which is almost around ₹ 37 million and there is one-time actually the impact of the provision for doubtful debts which we have adopted ELC provision on the placement receivables that is actually appearing in other operating expenses.

— Anil Bothra

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Q&A — 11 exchanges

I have only one or two questions. My first question is that why our broadband number of subscribers are not increasing. In this quarter also we are seeing 29,000 only. My original hypothesis was that if we have 8.4 million that is 84 lakh cable TV subscribers and by changing the set top box to hybrid and digital set top box, etc., we can convert most of them to broadband. So, effectively our quarterly number should be much, much higher now. In the last year in successive conference call, I heard that the management was telling that because of COVID we could not do those tie-ups and all those s

Piyush Pankaj

Yes, Amitabh first I will take on the broadband side then on the hybrid box side. So, in the broadband, the gross additions are still increasing. We are seeing that this quarter also the gross additions are more than what we did in last quarter. Yes, as you know the COVID has ended, the people who have adopted for the work from home or education from home they all are going back to the offices and schools. So, we are seeing some of those customers who are shifting and they are closing means some of the customers are shifting to their main base for their work, some are shifting as the schools h

Hi. Thank you for taking my call. First of all, I want to congratulate you for sustaining the performance. On a Y-o-Y basis the performance looks quite encouraging but, on a quarter,- to-quarter basis it is kind of flat so that is okay. I am happy to note that you are optimistic about growing in near future, so I just wanted to understand what is the response to this GTPL Genie new setup box. So, forget about the broadband part how will it help you to convert some of the standard cable customers into this and there is a second question which is when your depreciation numbers are quite high so

Piyush Pankaj

Thank you Shailendra. You are right that Q4 to Q1 is flat and if you see from Y-o-Y basis the growth is there. As you know that we have appointed Deloitte as statutory auditors of the company. The provision policy has been made consistent with GTPL group and revenue streams and one-time provisions have been taken in Q1 FY2023 which is part of other operating, admin and selling expenses. That is why you are seeing the flat results in comparison to Q-o-Q. How much are those provisions can you say we may not expect in future how much is the quantum? It is around ₹ 5 Crores which is there which we

Yes, hi Sir. Congratulations on good quarter. I just wanted to talk a little bit about NTO that has been rolling out as it is going to be rolled out soon, so I think the industry generally particularly the broadcasters have been quite pessimistic about the whole thing. I think our team has been quite optimistic so is it because of the revenue split between the LCO broadcasters and us changing or what is the nature behind the optimism?

Rajan Gupta

Essentially as of now I think contours are still taking shape. So, I do not think we are into implementation phase. Current deadline is December for implementation, and I think as of now we are neutral about that. So as of now we remain neutral and wherever possible, anyway ARPU increase opportunity we are trying; but from NTO perspective as of now we are neutral. On the cable TV front we saw margins shrinking a bit this quarter is that something we expect to continue in the future, or it also has a lot to do with depreciation I assume that other factors as well in the provision, is there anyt

Thank you for the opportunity. Like the question was asked before also and so I just want to repeat it, so we have added around 30000 around 29000 broadband customers this quarter. But I do not want you to give us a guidance but if you can share us what is your aspiration, how many customers, how are you preparing the organization, how many customers as an organization you want to reach in broadband say in the next three years from 8 lakh odd numbers today, do we see ourselves reaching 15 lakh, 20 lakh customers in the next three to four years?

Piyush Pankaj

Yes Hardik. As you know that from last five years when we did the IPO, we were at around 200k and we have grown around 4x in the last five years. We want to do the additions on the same level or increased level of that and that is the endeavor on which company is working. This quarter we have maintained that. As I have already explained that the gross additions are happening, gross additions are increasing. We are seeing that the gross additions are increasing that is very encouraging for the management and for the company. What would have been the gross addition Sir this quarter? It is close

Hi thanks for taking my question, Sir. So, I have a couple of questions and I would be sorry if I am repeating the question. So CATV revenue as we have seen the paying subscribers have increased and subscription revenue would have increased but I think our average revenue per customer on the digital cable business would have gone down one is that the right reading and why is it so?

Piyush Pankaj

You are talking about the ARPU? Yes, that is correct. ARPU on the digital cable business. Yes, ARPU in digital cable TV business in this quarter we have seen around ₹ 1 it has come down. Because of, you can say the market we lose on the higher side and grow in the lower ARPU side; but that will get corrected within a quarter and two quarters’ time. My question was if you could throw some light on your performance in newer geographies? Newer geographies we have entered into Madhya Pradesh, we have entered into the North- East market, Tamil Nadu, four to five markets we have entered and there th

Good evening, Sir this is Pratiksha here. So, my first question is on cable TV. You mentioned that our gross additions were 76,000 so how much of this would be basically migration to Genie and how much of this is inorganic growth if you could give those numbers?

Piyush Pankaj

Hi Pratiksha. 76,000 gross addition is in the broadband which we have mentioned. Already we have given that we have seeded around 5,000 hybrid boxes in this quarter. Do we have any other inorganic growth on cable TV gross basis? Those are on the pipeline that will come in the next or next-to-next quarter. Okay nothing for this quarter, right? Nothing for this quarter. Okay and the ARPU in cable TV for this quarter would be? It is close to around ₹ 119. Okay so basically if you started deploying Genie, we would have expected our ARPU to go up because the unit economics are better than our norma

My question is largely on the fact that if you look at the overall subscription revenues in 2020, 2021, 2022 it has been flattish at ₹ 1050, 1070 odd Crores, even if I look at the absolute EBITDA of the cable segment that has been flattish, the heavy lifting of the EBITDA has been done by the broadband incremental of 100 odd Crores in last two years from 2020 to 2022 and during this period itself we have seen that we have turned from number 2 MSO to number one MSO which kind of reflects that industry itself has not done great, so what I would ask you is for the next three years how would you s

Piyush Pankaj

I will just give it on the revenue and EBITDA side and then I think I will ask Rajan Sir also to put the light on what we can do in two to three years. See last three years if you see on the EBITDA, mainly the EBITDA has been impacted due to the activation revenue. The activation revenue which used to have ₹ 125, 130 Crores which was because of the deferred revenue there and the deferred revenue is coming down, as you know, in the Ind-AS. When the Ind-AS started in 2016, we had to do the deferred of activation for five years and after NTO, as we have been allowed to do some activation upfront.

Firstly, sorry for repeating the question just wanted a little bit clarification on my understanding. What would be the difference between the gross addition and net addition as we have mentioned and how was the homepass benefit the company if you can throw some light around?

Piyush Pankaj

So gross addition is the new sales, new customers which you are bringing into your network which is the gross sales, and we calculate net on the basis that the existing customer who is churning out from our system that has to be netted out and that is the growth we show as net additions. Just wanted to understand you had mentioned that we should take increase in the homepasses as one of the key matrices to evaluate the company going forward so how would that be material for us? For increasing the subscriber base you have to make the capability which is the homepass. The homepass is that you ca

Hi this is a follow-up question. I wanted to know this is a kind of follow-up to your previous comments in terms of inorganic growth what kind of acquisitions you have done in last quarter if any and what is the pipeline looking like for next one or two quarters?

Piyush Pankaj

Last quarter as I said there is no inorganic in the last quarter. The pipeline is long. We are looking forward that Q2, Q3, Q4 we will start getting lot of inorganic numbers also, apart from the organic numbers. So, we are very confident and hopeful that those inorganic deals will happen and it will start reflecting in the numbers. So just wanted to check the acquisitions are attractive from our company’s perspective but is it also an attractive proposition from the sellers’ point of view? Yes, as you know that anybody will sell only when it is attractive to that person and there is a consiste

Hi good evening, Sir. On the bandwidth cost are there escalation clauses?

Piyush Pankaj

User side or on the cost side? Cost side. As you know that we are always saying that our bandwidth will become commodity with the time and the prices will go down so we negotiate hard with our vendors, and we usually get the discount on what the rates are currently so that is the way we are doing it from last two to three years and we endeavor to continue on that way. So just pardon me for my ignorance, but I just wanted to understand how bandwidth is charged so is it on a consumption basis or is it bundle like for instance you have homepasses increasing X conversion but if you say we see an i

Thank you all for joining the earning call of GTPL Hathway for Q1 FY2023 and we look forward to talk to you for the next quarter results for Q2 FY2023. Be safe and healthy. Take care. Thanks a lot.

Management

Speaking time

Piyush Pankaj

Moderator

Shailendra

Pratiksha

Hardik Jain

Rajan Gupta

Parth Kotak

Anirudhsinh Jadeja

Amitabh

Sanketh

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Opening remarks

Pulkit Chawla

Thank you Michelle. A very good evening, everyone. I would like to welcome the management and thank them for this opportunity. We have with us today Mr. Anirudhsinh Jadeja, Promoter & Managing Director; Mr. Rajan Gupta, Chairman & Non-Executive Director; Mr. Piyush Pankaj, Business Head, CATV and Chief Strategy Officer; and Mr. Anil Bothra, Chief Financial Officer. I shall now hand over the call to the management for their opening remarks. Over to you gentlemen!

Anirudhsinh Jadeja

Thank you Pulkit. Good evening, everyone. I welcome you all to our Q1 FY2023 earnings conference call. At the outset I would like to express my gratitude to our stakeholders for being part of this growth journey. GTPL Hathway has begun FY2023 on positive note with consistent performance in digital cable TV and robust growth in broadband subscription revenue and ACB. We continue to explore our opportunity to expand our footprint throughout India and consolidate our presence in existing market by leveraging our digital infrastructure and capability; and building on the trust of customer by providing them enhanced service and product quality. With that I hand over to Mr. Piyush Pankaj who will take you through the business and financial aspects of the company.

Piyush Pankaj

Thank you Mr. Jadeja. Good evening, everyone. I hope all of you are safe and healthy. I am pleased to announce the business and financial performance of GTPL Hathway, the largest MSO in India. GTPL Hathway is consistently profit-making digital cable TV and broadband company in India creating value for its stakeholders over past six years with a growth of digital cable TV subscribers base by 2.3x and broadband subscriber base by 4.8x. We are a dividend paying company from last six years and maintaining our net-debt free status. Our ranking in Dun & Bradstreet India’s top 500 companies for 2022 as per net profit has improved by 60 places to number 364 as compared to the 2021 listing. Our CATV active subscriber base as on June 30, 2022, stands at 8.4 million and paying subscribers at 7.8 million. On Y-o-Y basis the increase in active and paying CATV subscribers is 400k and 500k, respectively. GTPL will continue to look at inorganic opportunities to augment its presence in existing and new

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