Dish TV India Ltd
NSE:DISHTV
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Dish TV India Ltd
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Ladies and gentlemen, good day, and welcome to the Dish TV India Limited Q1 FY '19 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Mr. Tarun Nanda from Dish TV India Limited. Thank you, and over to you, sir.
Thank you. Very good evening, ladies and gentlemen, and thank you once again for joining us for the first quarter FY '19 earnings conference call. Apologies for the postponement at the last minute yesterday. We are now ready to take on all your questions. We now have with us Mr. Jawahar Goel, the Chairman and Managing Director of Dish TV India Limited; also, Mr. Anil Dua, the Group CEO; and Mr. Rajeev Dalmia, the Chief Financial Officer.We will start with a brief statement from Mr. Dua, and we'll then open the discussion for questions and answers.I would like to remind everybody that anything that we say during this call that refers to our outlook for the future is a forward-looking statement that must be taken in the context of the risks that we face.I would now request Mr. Anil Dua to address the participants.
Good evening, ladies and gentlemen, and thank you for joining us today. It's my pleasure to report the first quarter fiscal 2019 consolidated results of Dish TV India Limited.Subscriber additions picked up speed during the first quarter. The net number of 301,000 additions were positively impacted by a sports-heavy programming calendar. Ramadan, on the other hand, moderated the additions in line with past trends. The total closing net subscriber base, therefore, stood at 23.3 million at the end of the quarter. 44% of all subscriber additions were of high definition. In total, HD subscribers form a promising 17% of the total net base of the company.Operating revenues for the quarter were INR 16,556 million, up 8% quarter-on-quarter. Subscription revenues for the quarter increased 8.1% Q-on-Q to INR 14,893 million.ARPU for the quarter reached to INR 214 from INR 201 in the previous quarter. EBITDA for the quarter stood at INR 5,568 million. EBITDA margin was recorded at 33.6%.Incrementally higher HD viewership, lower discounts at package levels and a price hike across a majority of recharge packages gave us a lift to subscription revenues during the quarter. Pricing power by way of price hikes is a positive sign that should stand us in good stead in the years ahead.Integration across functions post the merger is almost complete, and we remain optimistic about achieving the INR 5.1 billion synergies that have been guided for the full year.The TRAI Tariff Order came into force on July 3, 2018. Dish TV is in talks with various stakeholders.Dish TV India Limited sees the regulation to have the potential to minimize discriminatory pricing by ensuring a level-playing field between cable and DTH platforms.At a more macro level, there are clear signs of robust consumer demand continuing and fortifying the Indian consumption story, of which Dish TV should be a natural beneficiary. This year is going to be the year of change at Dish TV, change for the good. Whether it is a systems and processes or our approach to sales, service and marketing or, for that matter, our customer and vendor relationships or our products, everything is going to be viewed through the lens of excellence and efficacy. We believe that we're well placed for superior growth and profitability going forward.With that, I would like to open the floor for Q&A session.
[Operator Instructions] The first question is from the line of Sachin Salgaonkar from Bank of America.
I have 3 questions. My first question is I wanted to understand this quarter you guys had a very good ARPU hike, how should we look at the sustainability of this going forward, particularly in light of all the OTT apps, which are giving almost free content and that perhaps continues?
Okay. So to your first question, we had indicated at the previous earnings call that we are looking at a guidance of 7% to 8% revenue growth. This was on back of both the net adds going up as well as ARPU going up. So the numbers that you've seen this time, both are in line with that guidance, and we expect that the ARPU increase is sustainable, and we will -- this will ensure that we meet the guidance we've given for the year.
So you're not seeing any impact from the OTT apps?
So OTT apps have been around for some time, and they are -- we have also shared we also have our OTT plans going forward. OTT apps impact may be there, but there are other things that we are doing. So there are several factors which offset each other and, therefore, we do see that we should be able to sustain this ARPU.
Okay. So my second question is -- yes, sorry...
On OTT -- this is Jawahar here. On OTT, you know that there is a paywall is there, and it is not free. And as an individual broadcaster, they have their OTT, then it does sufficiently fulfill the requirement of the consumer, like, Star will have their own, Zee will have their own, Sony will have their own. So either they are using it as -- to create a B to C platform, but it's not coming for free.
Okay. Because I thought that once you have a mobile connection, you get it for free, everything is free. Even the apps like JioTV and Airtel TV are giving those apps -- all the TV channels for free.
But the Netflix is only 0.5 million in the country for so many years around. So -- and that is a different content, which is not available on a linear broadcasting. So that is a different content. If somebody wants to watch pornography, then obviously, we are not the vendor for that.
Sir, I get your point. I was merely looking from a Hotstar and Sony TV content. Anyways, so my second question...
For example, bold content. Hotstar content on TV is censored and whereas it comes on Hotstar, then it is uncensored. Then you have to watch it -- you probably can get to watch on American standard.
Okay. Sir, my second question...
[indiscernible] is allowed or something like that.
Okay. Second question is on Reliance Jio. Clearly, we did see some announcement coming at the AGM talking about their fiber rollout. I just wanted to understand from you guys how should we look at the impact from such a rollout over a medium to long term. I understand in the near term, there may not be any impact.
Well, this will be a question from everybody, and the fiber-to-home takes a long time. We had time and again made a study that our installer, a team of installer, they can do maximum 3 installations in a day, whereas on fiber-to-home, probably a team will take 3 days in a one-month home connection. So it is a slow burn, and one has to live with that. Number two, the consumption of television, in some home, I can agree that a person like you and me or anybody around this conference call, this is a relevant product. But the television in most of the houses is a family movie. Then the question comes on INR 200 for all the channels, I had, today, talked to the few broadcasters and asked them that if you have given content which is -- can be sold at INR 200. So some of the broadcasters said that they have only contract for a small screen. And specifically, the bigger screen contract is barred as far as Jio is concerned. Then I asked them to issue a statement. And now I will pursue with them to issue a statement, so all the stakeholder in the distribution space, whether DTH or in cable, and if we get the letter of confirmation from them, so that this should satisfy for the time being.
Okay, sir. This is very clear. And last question is for Dalmia ji. Sir, any one-offs in the quarter? And can you quantify the impact from Ind AS on various revenue line items?
Yes, there is an impact of around INR 15 crores due to Ind AS 115. We have deferred revenue of INR 15 crores to the next few quarters because of the applicability of 115. If that was not applicable, then our subscription revenue would have been INR 1,505 crores.
Okay. Is it only impacting subscription revenue? Any other line items it's impacting?
No, actually, it is impacting activation revenue, which is part of subscription revenue. There is no direct impact on the recharge revenue.
The next question is from the line of Vivekanand Subbaraman from AMBIT Capital.
Can you please help us with the split of the revenue and also delve a bit on the accounting policy for the set-top boxes and the way you have now merged the 2 companies? Shed some light on how you account for the set-top box receipt. Is it over a period of time? Any changes on the depreciation? That's question 1. Secondly, you spoke about price increases and also the Bharat Pack that you have, right? So that pack continues to remain at INR 100 a month, including taxes. There, you have not taken any price increase. I see that you've taken price increases in all other packs. And if I look at the a-la-carte data that you gave, you mentioned that you have 2.4 million customers now; 6 months back, you had only 1.3 million customers. So is there a situation where you are taking price increases, but more people are moving to a-la-carte and, therefore, you are not able to really pass on price increases? How should we think about the ARPU movement through the year?
Yes. First, there is split of revenue: subscription revenue, INR 1,490 crores; lease rental, INR 25 crores; Teleport, INR 5.5 crores; service charges, INR 39 crores; sale of CPE, INR 48 crores; advertisement and other operating income, INR 48 crores. So the total is INR 1,555 crores. And in terms of accounting, yes, we have aligned our accounting with the D2h merger. They were depreciating the box in 7 years, we have started depreciating in 5 years. And the impact of Ind AS 115 on both the companies, rather on the merged company is around INR 15 crores. So INR 15 crore revenue is deferred in the next 2, 3 quarters based on the bundling of content with the box, and it will continue in the ensuing quarter also. In terms of other activation revenue and subscription, I feel there is no change. As far as goodwill and customer relationship is concerned, we continue to abide by the accounting standard for the same.
Vivekanand, on the price increase, I think you mentioned that we have not taken a price increase on the INR 100 pack. So that's true. But we've taken very aggressive price increases, and we were the first one to do that on all other packs, like, the Swagat pack going up from INR 199 to INR 209; or our Super Family pack actually was 90% of it was at INR 283 went up to INR 299; Maxi Sports went up from INR 342 to INR 350. Also, on the lower end, actually, if you see majority of sales were in Swagat pack at the lower end, where not only did we take up the price from INR 199 to INR 209, which was bold and aggressive, given the market situation earlier this quarter, we also took up our HD pack of that to -- which was at INR 209, which we had taken in January this year from INR 199 to INR 209, which had 7 HD packs -- 7 HD channels that we took up to INR 229. So actually, we've been pretty aggressive. And after our price increase over the quarter, the other players in the industry have followed, and they have also looked at us and then taken price increase 2 or 3 months down the line. So this price increase, clearly, we mentioned in our release also that clearly showing some brand power and pricing power around our brands, both Dish and D2h. This happened on both our platforms.
Right. But then how do you read this trend of the a-la-carte usage growing to 2.4 million, almost 10% of your customers? Is it because of these price increases that the a-la-carte usage is growing? How should we think about this?
No. You see, these a-la-carte pack is not a base pack, it is an add-on pack, which you take on top of the base pack that you have. So if somebody has our Bharat Pack of INR 100, he finds it probably difficult to go up to INR 199, but we can always ask him to buy 2 or 3 a-la-carte packs, pay INR 30, and at INR 130, he can watch much more content than he was otherwise watching. Now this is, therefore, consistent with the fact that while Mera Apna Pack and Mera Wala Pack on the 2 platforms, this is going up to the figure of 24, as you rightly said, it is not leading to any downgradation, it is actually leading to revenue going up.
And also, it is in line with the new Tariff Order, which expects us to sell each pay channel on a-la-carte basis. So this we have started doing it since 4-6 months, and it is a very happy result. And we'll continue to push that big property.
Right. There's one follow-up, if I may ask that on the content. So just to understand on a Q-o-Q basis, our content cost has not -- I mean, cost of goods and services has not changed much despite this being a sports quarter and also us seeing an improvement in ARPU. Any color on that and the status of the negotiations? And how it ties up with the synergy? That will be very helpful.
See the full benefit of synergy in content has not come in this quarter, but it will be evident from the current quarter and subsequent quarters. And we have been able to maintain the cost because they were synergies in other cost, which is part of the programming cost.
Great. And then what proportion of the cost of goods and services would be content, pure content cost?
I'll come back on this.
The next question is from the line of Yogesh Kirve from B&K Securities.
Sir, regarding the ARPU increase, it's fairly -- during the quarter, it's fairly a strong increase. So I understand you've talked about the increase in the prices, but earlier, we have seen that the price hike takes about 2 or 3 quarters to flow in fully into our ARPU number. So what was different this time? And also wanted to understand how important was the other drivers of the ARPU for suppose the HD and also the IPL.
Yes. So Yogesh, you're right, price increase does take some time to sink in. But since we took it at the beginning of the quarter, clearly, we have seen the benefit coming at least in the second month partly and third month fully. Also, this is only one part of the story why ARPU has gone up. There's also reduction of discounts. We had Pay Term and other activities at certain levels of discount. This was there on our website. We used to give -- long time back, we used to have, of course, Teen Pe Chaar, but we have changed that sometime during last year to, say, at 10% discount on somebody buying 3 months -- for 3 months and more. Now that has actually gone down starting 1st April. You can see it on our website now, which is 7 days free on 90 days. So that's clearly less than 10%. This is just one example to bring flavor to what I'm saying. So discounts have gone down, prices have gone up. And then upgrades, which is the other thing, from lower packs to higher packs, they have gone up. Add-on pack sales have gone up. Lots of HD add-on packs, Mera Apna Pack, the a-la-carte packs, which have gone up. And also, of course, some increase is there because of IPL, which I spoke about some time back. So there are people buying sports channels, especially during this quarter. So that is immediate impact in the quarter itself.
Sir, IPL, I understand, I mean, this year, the matches were only there on the sports channel unlike the previous years. So if we look at this number, is it safe to assume that this could be on base number for the subsequent quarter as well so the seasonal factor should not be so high?
See, seasonality is there, but certainly, this is fairly representative of what we have in this quarter because as you yourself said that the full impact of price increase will only come in subsequent quarters, so obviously, in quarter 2, we'll see the full impact of price increase. Besides that, we've also taken a box price increase of INR 200. Now that also you will see the full impact coming in the coming quarter because that was taken later in this quarter, and that will also show its impact in the coming quarter.
Right. That's helpful. And sir, my second question is regarding -- just I wanted to look at what was the underlying trend in the operating costs. So I understand in the previous quarter, there was a certain one-off related to the merger. So wanted to understand were there any one-offs in this quarter in the operating costs?
No. There was only one-off -- one item which was one-off, which was the forex loss of around INR 21 crores because of the depreciation of rupee. Whatever loan which was unhedged was provided for. So that amounted to INR 21 crores. Apart from that, there were no one-offs. It was a fairly regular expenses.
So I understand we had this arrangement of the transfer of the infra business to Dish Infra. So that would have led to any savings in the license fee, right?
Yes. That is there because that was done from 31st March 2018. So whatever license fee provision was there in the erstwhile Dish TV and Dish Infra was also a slide in the merged company and merged infra company also.
Right. Sir, is it safe to assume that considering that the business, which is transferred during the quarter, was having revenues of about INR 350-odd crore, so the benefits would be to an extent of about INR 30 crores, INR 35 crores compared to fourth quarter?
Business, which was transferred, was not INR 350 crores, it was around INR 225 crores, INR 250 crores. So the net gain was around INR 25 crores.
[Operator Instructions] The next question is from the line of Mayur Gathani from OHM Portfolio.
Sir, I wanted to dig more on the a-la-carte customers. You're saying on Bharat Pack, let's say the base pack is INR 100, they can add on -- so they add on packs or they go by individual channels? And you have deals with the content providers on a fixed fee basis. So how does that work?
Yes. So Mayur, you're right, people can add by a channel. So that's why Jawahar ji just said that this is advanced implementation of Teleport, where basically a customer can choose by a channel and, therefore, whichever base pack you're sitting on, you can pick up few channels that you don't have, pay about INR 10 for it and get the channel added to your subscription. So in terms of content deals with broadcasters, certainly, this is something which -- is something which broadcasters are watching very closely because this is throwing up some interesting findings. Certain broadcasters are becoming uneasy with the findings because it is throwing up viewership data, and it's really showing which channels people are really voluntarily choosing. So it is data useful not only from revenue point of view, but also from our cost negotiation point of view.
But you still continue to have fixed content deals with the broadcasters, right?
Yes, there is a deal with the broadcaster, fixed-fee deal, but we don't mind to pursue this new concept and our deal is short term. So now we are expecting from broadcasters to come out with their tariff as per the new Tariff Order, which is now notified...
3rd July.
3rd July. They've done it, the tariff. We are preparing ourselves talking to broadcasters, stakeholders to come up with their pricing, so -- MRP pricing.
Okay. And another question would be, can you quantify what is the synergy amount benefit this quarter that we saw in the numbers? Overall, it is INR 510 crores that you specified for the year. Can you quantify for this quarter?
On a quarter-on-quarter basis, maybe after 6 months, we can provide, that is after September quarter.
Okay, great. And you just mentioned, I mean, Jio is -- could be a threat for a much longer perspective, but for a short term because the time taken for them to get a fixed line connectivity to individual house is still long way. So we shouldn't be much worried on that front, right?
Yes, absolutely.
The next question is from the line of Vikash Mantri from ICICI Securities.
Sir, what is the average ARPU of the consumers who are on a-la-carte? Is it lower than the company average or higher than the company average? Second question is, can you help us explain the effective license fee post the accounting changes that would have happened taking Videocon's numbers also similarly passing through Dish Infra? Third point is, can you explain us the change in lease accounting, that is, lease rental accounting that would have started by now?
Yes. As far as lease accounting is concerned, we have all aligned our revenue stream based on Ind AS 115, which means that whenever we are getting a set-top box or providing it on rent or hire purchase, we are apportioning the income based on the bundled offer which is provided to him. Suppose we provide 3 months' content with the initial activation charge, the revenue is apportioned over a period of 3 months. And because of that, a sum of INR 15 crore was postponed or deferred in this quarter to be consumed in the subsequent quarters. The lease rental income, which was provided by Videocon in their erstwhile regime, will continue to be adopted in the natural course because it was part of the contract with the subscriber, and we are not changing that.
So sir, it is not similar to the lease rental which we used to have ourselves where we used to amortize it over 3 years and 5 years later. So it's not that kind of a thing, this will get amortized over 3 years -- 3 months itself?
Yes. That is the suggestion given by the auditors, and I think the industry will also follow it. More than 60%, 65% of the sales on activation basis or activation charge is on 1 month basis, but 35% is on 3 months, 6 months and 12 months. So there will always be deferment for the box sold for 3 months, 6 months and 12 months. But this is not...
And what is the component of activation income that you are booking per box?
It is around INR 925. But if it is for 3 months, then it will be INR 925 divided by 3.
Okay. Going ahead on the license fee and ARPU, sir.
Vikash ji, on license fee, there has been a discussion in the government at the highest level, and the earlier cabinet note has been dropped, and they are preparing a new cabinet note for 8% AGR basis that has -- is being worked out, and they will call the -- all the stakeholders. So hopefully, in next 2 months, 3 months, we will get some positive report on this. Our lessors has been extended. Since December, it was not extended, but last week, it has been extended provisionally.
ARPU is calculated based on the average revenue predicted only, and we cannot differentiate between the a-la-carte revenue and the package revenue because there are 7, 8 items, like, value-added services, movie-on-demand, a-la-carte pack, grace charges, reactivation charges, regular recharge revenue. So it is a combination of the entire subscription revenue derived from the subscribers divided by the number of months for a number of subscribers.
Sir, I was asking we have segregated or we have informed we have 2.4 million subscribers who are opting for a-la-carte. What is the average ARPU of these subscribers? Is it higher and lower? Because the way I read is because this is an initiative, if we're adopting the new Tariff Order, clearly, whatever these ARPUs, these will set the trend for the company, and that is why I was interested whether we have lower than the company's average or the higher.
No, definitely, it is not lower. But suppose you ask me that INR 99 plus 3 packs, it will be lower than the average.
But there are many people who are taking a-la-carte packs even on higher packs. So this is across segments that people are opting for Mera Apna Pack. It is not that a person downgrades and then takes a few channels. That's not how it works. It works that you are at a particular pack, and then you can take a few more channels.
Vikash ji, to add here, like, Ten Sports, we had been -- we had put it on our Mera Apna Pack. So the revenue was after paying to the broadcaster, it was positive to us, whereas it was a part of content cost. So even we had the FIFA, but still we had a positive revenue. So this gives us a tool that if we're not able to negotiate a content with a broadcaster, we can immediately sell it as a-la-carte. And the broadcaster also knows the pull of their channels and that content. So this initiative will give us really ease that we are on the right side of the luck. So we are the only company amongst the distributors, cable and DTH, we had taken this initiative, and we see as a good result coming out of it.
The next question is from the line of Dipesh Mehta from SBICAP Securities.
Sir, just wanted to get a couple of data-related clarifications. If we look this quarter, interest cost has significantly increased. Even, I think, initially, you indicated about forex loss of around INR 21 crores. Even one adjusts that number, it seems to have increased sizably this quarter. So if you can help us understand how much is related with the contingent liability-related provision out of that and how much is real increase kind of thing. Second question is about -- can you help us understand about the CapEx incurred during the quarter and planned for the full year? And then I have a question on debt-related position, if you can help us where we are at the end of the quarter.
Yes, the gross debt was INR 2,750 crores, and the net debt is INR 2,200 crores. The CapEx during the quarter was INR 190 crores and interest, yes, there were one item of interest, which is -- which was an exception. We paid around INR 20 crore as onetime fee for procurement of loans for loans squared off D2h platform.
And also from prepayment fee.
The forex loan is not a part of foreign exchange -- sorry, not part of the finance charges, it is reflected in the other expenses.
Okay. Then sir, just on debt part. If, let's say, one adjusts INR 20 crore of forex loss in other expenses, then other expenses -- or maybe including employee expenses, there is sizable dip. I understand about INR 60 crore one-off was there last quarter, but even after adjusting these 2 things, can you help us understand what ones you look at...
Like we have not disclosed the synergy figure. But there were synergies in employee cost, their outing cost, transport, logistics, call center and other general administration, like travel and tourism, wherein we adopted a new policy. So the saving was reflected in the other expenses. And apart from that, I don't feel there was any other exceptional item in other expenses.
So interest cost, only this INR 20 crore onetime fees which we paid for prepayment of some of the Videocon loan, right?
Yes. It was part of the entire exercise of the loan swap from various banks to one bank. So we had to pay onetime fee to the bank which provided facility to the merged company.
And sir, now what would be the interest cost which we have now compared to what it was earlier?
The average will be around 8.5%, which has moved up from 7.5% earlier because the rupee loan which we have borrowed fresh is at 9%. So the average, including the hedge cost, will be 8.5% -- 8%, 8.5%.
Okay. And sir, so adjusted for INR 20 crores, this is broadly likely to be the interest cost going forward?
Yes. There is one item which is provided for on the license fee that will keep on fluctuating. This is the provision made in the books of accounts.
So is it possible to give last year what was that number in terms of -- because quarterly, I think, you might not be having that number about license fee provision and interest outgo?
No, I have the number. This quarter, we have provided for INR 55 crores. And last full year, it was INR 1,375 crores.
Okay, this is provision-related number for liability license?
Yes, yes.
Okay, okay. And sir, last question is, can you help me understand what would be the effective tax rate one should build or expect going forward? Because that is one of the volatile item, if you can provide some color.
What is the expected -- sorry, I could not get.
Effective tax rate.
Effective, we are now in MAT only. So we have paid around INR 5.25 crore in this quarter. And for the whole year, it will be around INR 20 crores, INR 25 crores. We are not in a full-fledged debt involvement because of the brought forward losses from the merged company.
Okay. So around INR 20 crores, INR 25 crores is likely to be taxed out.
Yes, PAT also.
The next question is from the line of [ Avinash Kumar ] from Moon Capital.
Yes, I have a set of questions. My first would be, what is the management's view on...
Mr. Kumar, may we request you to speak a bit louder or come closer to the phone please?
Yes, I'll do that. Am I audible now? So I have a couple of questions. First would be, what is the management view on the on ground implementation of the TRAI Order, given that now TRAI has come out with a press release stating the time lines? So 2 part to it, by when does management anticipates the actual on ground implementation to start? And do you also expect any further legal hassles to come up, given that Star has filed a caveat in Supreme Court? And second part of the question would be, how do you see the whole distribution industry changing post this TRAI Order implementation? If you can answer this, I'll move to the second part of my question.
Okay. You see, we are in democracy, anybody can go in the court. But after so much of lengthy battle, we don't know whether Supreme Court will intervene in this. But still there is a -- ifs and buts will always remain. Number two, the biggest differentiation in terms of paid channel cost and the tariff fee, this is rather a very private negotiation used to happen between the pay channel and the distributor. Now in new Tariff Order, the discrimination will not be there. Just to give you an example that if you come to Arasu Cable in Chennai, they are running their network in analog. Broadcaster goes to them, and they say, "Okay, baba, run our channel so that we can earn the advertisement revenue." So if I am as Dish TV paying, say, INR 30 to a particular broadcaster for these subscribers on the platform, there their revenue is even less than INR 1 per subscriber. So this discrimination should go away theoretically, and we will wait. Otherwise, Dish TV with D2h platform, we are shifting D2h platform to the southern platform, and for that we will have a content negotiation for southern channel or the focus channel, and other channel will be either will not be shown or if it is not relevant, then we will pay the different pricing. So broadcaster will ask us, say, 15% of what we are paying to the -- currently. They will give us the content at 15% of what we are paying for sub-basic. [indiscernible] which we are working out. Let's see, give us 1 or 2 quarters, how we are able to put it in place.
Right. Right, sir. No, I understand that this will, obviously, bring in transparency for the overall industry, which is good in the long term, right, medium to long term. What I basically want to understand from you because you are negotiating with the broadcasters also and talking to other industry players as well, by when can we expect the on ground implementation to stay -- to start off, let's say, maybe by fourth quarter of FY '19 and then the numbers start flowing in from first quarter of '20? Is that the time frame we can look at when the whole Tariff Order as a package gets implemented?
Yes. See, The TRAI Tariff Order, there is a time line has been provided. Apart from that, they are extending the date, which was the Tariff Order was under court stay. Those are the grace days. But we -- each distributor has their own commitment towards this Tariff Order. Dish TV has been committed, and we have been -- we had implemented -- partly implemented, we'll continue to do that. It is rest of the industry, if they want to implement when they want to implement, and TRAI has to take action against them.
Right. Okay. Then second part of question, I mean, we have discussed Jio also earlier in the call, but I'll be very specific here. Jio has plans to become a triple-play service provider, with cable, broadband and VoIP combined together. So how do you see that threat coming along, I mean, Jio's threat panning out in the medium to long term? And you -- how do you intend to take countermeasures so that this threat doesn't magnify and eats away into your consumer base? Because why I'm saying this, from a consumer, I'll be more than happy if I can pay to one provider and it takes care of my bills for the cable, broadband and VoIP combined together, and I need not go to -- not pay bills to the 3 different service providers. So given that convenience, how do you see this threat panning out and measures you intend to take to counter this threat?
Well, this question should be asked from the analyst who heard when the [indiscernible] was happening, and they were very gung ho on the cable companies and on triple play. And DTH companies like us were bitten by the market. So this is a -- triple play was the foray for cable TV companies, their wire is going in the home, but they could not do it. So I think that the urban population and rich people will have -- or maybe upper middle class will have this kind of a facility. But we should also not forget that we have a family living in the semi-urban and rural markets. So we will see. And as I said in the first question -- first answer, Q&A, that the broadcaster says that the content shared on reference to Jio is only for small screen, and it is not available for the bigger screen. So let's see. I told them to issue a statement. So I'm expecting a letter from them.
Right. Right. That should provide comfort to the investors, right. Just a last bit. So do you think this Jio threat is more magnified for the MSO industry compared to the DTH industry, given that Jio has this FTTH launch plan?
No, no, it will have definitely impact on the subscriber, whosoever is the service provider in city like Bombay, Gurgaon or high-rise city or maybe big 20 cities or 30 cities, there will be impact, definitely will be impact, and it should be a welcome impact.
Okay. So what I understand basically is, one will be there will be a time line issue because Jio needs to get its fiber backhaul ready to launch it, and secondly, you feel that your rural or semi-urban base will kind of shield you from direct competition from Jio, if my understanding is correct.
See, I -- when we started Dish TV 13 years back and that time we were calculating IPTV to have 5% market share. And in 13 years, IPTV could not attain any market share. Now it is almost a decade. After a decade, this story is again coming, which should happen, definitely should happen. But in the homes, we don't consume. Most of the homes don't consume broadband in the home. They really will be content from telephone and, obviously, for only personal viewing. But we will change the track as and when it goes. There is no...
Right, sir. Right, sir. I got your point.
I don't want to make a statement.
The next question is from the line of Rajiv Sharma from HSBC.
Just a couple of questions from my side. Firstly, on this TRAI Tariff Order, so there are set of QoS which every DPO is supposed to comply with. So Jawahar ji, what does this mean to the industry? And what does this mean to Dish TV? Will it not take the costs up if they have to be complied fully? And how are you going to address this over the next couple of quarters? Second, is there clarity around the 15% rule? Because TRAI press release doesn't clarify that. So what's your reading on that? And thirdly, you rightly mentioned about Jio having a -- they will need to enter into a different contract with broadcasters for Internet streaming. So will the TRAI Tariff Order apply to them? Or will they be applicable for higher cost because TRAI Tariff Order kind of caps the cost for -- the prices for broadcasters? So will it be -- will this rule apply to them in your understanding? That's it from my side.
Read the first para of the Tariff Order. It says Internet as well. So it not only -- it applies for the DTH, cable and IPTV. So as -- well, the tariff is a nondiscriminatory. So if anybody is paying higher than me, then they will get an advantage. And if somebody is paying less than me, then I will take advantage of the pricing. So this is one answer which I will give you. Number two, on QoS, we are still structuring it. There was a QoS issues in way back 2015 also which was not implemented. TRAI gave a statement in [indiscernible] that they are not pursuing it. But I hope that next week, they are mentioning the matter, and we will suitably argue our matter and our defense. And as far as the compliance goes and noncompliance is there. The biggest noncomplier is the pay broadcaster, and they had never been penalized by TRAI. So we are very squeezed -- sandwiched between the broadcaster and the consumer. So our number -- our chance of penalizing is very little.
Okay. So will there be a cost increase for you when you start complying for the QoS, means you adhere to those norms?
I think we -- almost we are in line with the what is the quality of service is there. And plus, we have been subsidizing our set-top box. So that's why the compliance will give us the way that we start doing business in that fashion. So it is not [indiscernible]. I think we have to fall in line with what they have. If not, then we will go back to TRAI and agitate our matter.
And what's your reading on the 15% rule where the Chennai High Court mentioned it arbitrary, but what's your read? And with the Tariff Order now coming from TRAI, is that getting implemented? Or -- what I'm trying to understand, QoS, you or the DPO side of the industry has hesitation. 15% rule makes life easy for the broadcasters. So what is the Tariff Order then because it is the summation of these 2 things only?
I think in the nondiscrimination, there is so much of gap. This 15%, if we don't get, even then we are earning. So we are not counting 15% for the time being. And the High Court has said that it is the arbitrary. Arbitrary means that there is no basis of 15%. It can be 15%, or it can be 14%. TRAI has to reworkout and renotify it. So we are not counting on that for the time being because there is lot of flesh available for us even without it.
Okay. One last question from my side, is what is your single largest concern arising out of this Tariff Order?
I think it is opportunity. Opportunity because the pay broadcasters, they never used to meet you, they only come to sign a contract for a yearly, 2-yearly contract and then you don't see them. So I think it will be -- create a partnership kind of a life going forward. And if they want to earn the revenue, they have to sit with us and do marketing of their content. So I think it will be a partnership model.
So there is no concern as far as Dish TV is there?
I think this concern is not for the DPOs' base. MSO may have the concern on the losing out on carriage revenue. That may be a concern. But on DTH, there is no concern.
And one quick question on financials. So 33% margins this quarter. So you -- do we still have synergies left or we think that we will be able to maintain this 33% for this fiscal?
So we had guided for 34% to 35% EBITDA, Rajiv. And so this 33% is a clear indicator that we are in the right direction. So we should be able to -- are endeavored to accelerate it further.
And next quarters, will ARPUs come little bit down because of sports pack and IPL thing baked into the ARPU numbers this quarter? And how much of this is also -- this ARPU increase of INR 214 is derived from activation because you took this INR 200 hike on the box prices?
So this is a never-ending discussion because ARPU, we, our team, hundreds of people keep on doing the exercise to get extra penny from the customers' pockets. And let's wait for the next quarter.
[Operator Instructions] The next question is from the line of Vivekanand Subbaraman from AMBIT Capital.
Did you share the metrics on churn because I missed that? And secondly, just wanted an update on DD Free Dish. What's going on there? Anything you heard from the government? And the Tariff Order discussion that you had right now, why is it that one of your competitors, a DTH player, is also opposing the Tariff Order? Because if I understand correctly, your a-la-carte subscriber base seems to be on a lower ARPU level because you mentioned, right, 100-plus-some channels. So why are you so enthusiastic about the Tariff Order if the customer ends up paying less?
See, between -- in our group, we have this -- company has their own autonomy, whereas maybe in Tata Sky, they don't have the autonomy from the -- their parent company. So they may agitate it. Whereas we as Dish TV, our management has a full autonomy from our group company, that's one. So we pursue the Tariff Order, and we will continue to pursue it even we are intervener in the court cases in favor of Tariff Order.
The churn was 1% per month.
Okay. And on Free Dish and what really excites you about the Tariff Order on the customers' side...
Indiscernible]. As I came to know that they are deliberating their talk to each of the broadcasters to ask for carriage fee, which is they are in the tune of INR 8.5 crore and INR 6.5 crore for new channel. Plus they are seeking for a free -- FCT, free airtime. So I don't know what is the decision has been taken or rather decision has been taken or not. So we will know once they take their decision.
Right. And on the ARPU side, because the a-la-carte user base, once the new Tariff Order gets implemented -- the ARPU is clearly lower right now, isn't it? You discussed that in the past. So how do mitigate that if consumers don't pay more?
The way industry has been built -- structured, it will change. We have capability of charging under INR 30 for our size and plus revenue share. So we will continue to push it. Let's see how successful is TRAI to implement their Tariff Order.
The next question is from the line of Mayur Gathani from OHM Portfolio.
Sir, with all the discussion that I hear, going forward, will ARPU actually be relevant for you guys? I mean, you guys just be pure distributors. So will ARPU will have any prominence?
I think it will be a pass-through revenue. So like we do -- we have a relationship with the -- in the VAS or pay-per-view kind of a property where we share the revenue with the content provider after deducting the license fees, collection cost, taxes, then we share the revenue. So same way, it will be a pass-through revenue, and that should save us the license fees as well, which we had already agitated with TRAI, that since after the new Tariff Order, the whole of the content cost is a pass-through revenue, so we should not be -- we should fall in line with the teleco where interconnect is not counted for the...
License fees.
License fees. So let's see. We have a work in hand. We'll continue to push TRAI for that.
Two more questions. Sir, what is the cash flow for this -- positive cash flow for this quarter?
Cash flow was around INR 100 crores, which was used for fresh LC.
Sorry, which was used for?
Fresh LC.
Letter of credit for drawing...
Fine, fine, fresh -- so free cash flow was INR 100 crores, which was used for fresh LC. And sir, historically, we have seen...
Mr. Gathani, may we request you to come back in the queue for a follow-up, please? We have other participants waiting. The next question is from the line of Riken Gopani from Infina Finance.
I just wanted to understand...
Mr. Gopani...
Am I audible now? I just wanted to understand broadly what would be our subscriber mix in terms of qualitatively between urban and rural markets. If you could share some metrics on that?
Yes. So Riken, we had mentioned that in the last call that after D2h coming with us, we are now 65% rural and 35% urban.
Okay, okay. And in terms of subscriber additions, is most of the additions happening in the DAS IV markets? Or how is the subscriber addition panning out?
Yes. So you're right, a bulk of additions are coming in DAS IV, but also, with our focus on high definition, et cetera, that is another source where we are trying to build up our new acquisitions. Also, we are going aggressive in South across cities with our new strategy which Jawahar ji was hinting at a while back, we are aggressively providing content on both the platforms and going for rapid subscriber base increase across markets.
So in terms of your -- as you mentioned that you're going more aggressive in the South, what would be, let's say, our current market share in South? And where do you see that panning out?
That state-to-state market share we don't discuss in the conference calls because this is slightly competitive information. But if you are interested, in one-on-one, we can discuss.
The next question is from the line of [ Avinash Kumar ] from Moon Capital.
Yes. Just a few follow-ups. One would be, does your CapEx for the full year guidance stands at? And what would be your CapEx guidance for the full year FY '19?
CapEx guidance will be slightly less, like, we have done only INR 190 crores this quarter. So based on this rate, it will be around INR 800 crores to INR 900 crore only. And...
For the full year?
Not INR 1,100 crores or INR 1,000 crores, which we had guided earlier.
Right, right. And I mean, will this be lower due to the synergy benefits will rise throughout the year?
No. This is due to the renegotiation of the box prices and accessories with vendors, which has resulted into synergies as well as some reengineering done at the level of Dish, which will give us around INR 30, INR 35 on a per Dish basis.
I'm sorry, I missed the last part. Can you repeat, INR 30, INR 35 of?
Yes, we were buying this at INR 100, now we will be buying at INR 65.
Okay, okay, got your point. And just a last bit of -- I mean, we had this discussion about this 15% cap, discount cap, which is arbitrary and Jawahar ji did mention that it can be higher, lower. So do you see that because of -- just because of this issue, the whole legal mess that we saw getting elongated? I mean, again, somebody comes up and says, this is discriminatory, so come up with a new formula, and we reach, like, point 0 where we begin from last one 1.5 hours -- last 1.5 years?
Yes, see, I was told that -- I had a discussion with AIDCF, the association of the MSO. They were having 2 thoughts that to go against the order of Chennai High Court in the Supreme Court to ask for 15%. So they had chosen not to go there. So this means that they are going back to TRAI, and TRAI will in big time, in 2, 3, 4 months' time, they will address this issue with the new percentage and this thing. So that's why I said that I'm not worried of this.
Right. I understand what you're saying. And just last one bit. You said the churn was 1% per month. Can you give me the comparative data, I mean, for the last year, FY '18?
Yes, for the last quarter also, it was 1%. But if you talk of the whole year, it was around 0.9%.
For FY '18, you mean?
Yes.
[Operator Instructions] The next question is from the line of [ Akshay Goswami ] from SBICAP Securities.
May I know the subscriber acquisition cost for the quarter?
Yes. It was INR 1,575 crores.
INR 1,675 crores?
1-5-7-5.
The next question is from the line of Jay Doshi from Kotak Securities.
Just a bookkeeping question. Can you let us know the quantum of license fee provisioning for this quarter and the amount paid to the government authority, absolute number, if possible?
The total amount payable was around INR 260 crores, and we have paid half of that. And by 31st July, we will pay the balance amount.
Understood. And how about provisioning?
Provisioning was INR 410 crores.
The next question is from the line of Mayur Gathani from OHM Portfolio.
Sir, historically, we've seen that in the ARPU, once it goes up and because of price increases, there's usually downtrending and next quarter, you had that people have downtrended and hence the ARPU has fallen. How do you see this again? I mean, in the coming quarters, you're not giving us a guidance of -- you've overall given a guidance of 7%, 8%, but still this INR 201 to INR 214 was a big jump.
Yes. So basically, what the sacrosanct really is the 8% revenue guidance that we've given, there are lots of activities that are going on. Some are aimed at getting new subscribers, some are aimed at increasing our subscriber base, some are aimed at increasing upgrades, some are aimed at increasing ARPU. So it's really every month to month, we look at what combination is the most potent to give us the 8% revenue. That is why we don't want to be very specific. But combination of these factors in terms of ARPU increase, in terms of subscriber increase, in terms of upgrades as a combination should lead us to our desired guidance.
Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Tarun Nanda for closing comments.
Thank you, once again, for joining us, ladies and gentlemen. We soon would have the transcript of this call on our website, www.dishtv.in. Look forward to speak to you again at the end of the second quarter or even earlier on a one-on-one basis. Thank you, and have a great day.
Thank you very much, sir. Ladies and gentlemen, on behalf of Dish TV Limited, that concludes this conference. Thank you for joining us. And you may now disconnect your lines.