According to a report by Crisil, the company’s operating margins may face pressure in fiscal 2024 and 2025 due to moderation in the DTH subscriber base, partially offset by OTT aggregator Tata Play Binge’s improved metrics and Tata Play Broadband’s expected breakeven.
The company’s DTH subscriber base decreased in September 2023 compared to September 2022 due to competition from DD Free Dish and OTT platforms.
The company is backed by Tata Sons, Walt Disney, and Temasek.
Tata Play’s subscriber market share decreased from 33% in September 2022 to 32.43%, while the industry subscriber base decreased from 65.58 million to 64.18 million, according to TRAI data.
The company’s consolidated revenue declined 5% to Rs 4,499 crore in FY23 due to a fall in DTH revenues. However, the de-growth in DTH was partially offset by higher revenues from Tata Play Broadband and Tata Play Binge.EBITDA decreased 30% to Rs 1,361 crore due to revenue decline and higher deferred equipment cost recognition.In FY21, the company changed its accounting treatment about expenditure on customer premises equipment costs from the entrustment model (capital expenditure) to the sale model (operating expenditure), which impacted its EBITDA.
The rating agency has reaffirmed the DTH company’s bank facilities worth Rs 8,000 crore due to its healthy business risk profile driven by its market leadership in the DTH segment.
Crisil said Tata Play is expected to deploy most of its planned capex going forward towards the broadband business, which will be managed prudently.
Tata Play has infused equity of Rs 455 crore and Rs 209 crore in FY22 and FY23, respectively, in Tata Play Broadband. In FY23, the broadband business saw a 49% increase in revenue to Rs 260 crore, while its net loss narrowed by 16% to Rs 124 crore.
The rating agency stated that Tata Play Broadband operates in seven cities, but due to its limited presence, subscriber growth is expected to moderate with higher churn and lower gross additions.
Tata Play Broadband had 473,013 subscribers as of September 30, 2023.
Tata Play has allocated Rs 1109 crore towards disputed licence fee liabilities and recognised Rs 1958 crore as a contingent liability for the fiscal year ending March 2023.
As of December 31, 2023, Tata Play had Rs 296 crore in cash and equivalents, while its broadband business had an outstanding debt of Rs 64 crore.
