The Hindu Business Line : Dish TV fund-raising: More in store?

Dish TV has completed a preferential allotment of shares and warrants amounting to Rs 250 crore to Indivision India Partners, a Mauritius-based Private Equity Fund.

About 1.25-crore shares of Re 1 each have been allotted at a price of Rs 100, while 96-lakh warrants have been issued that can be converted at Rs 130 per share (a 35 per cent premium to current market price) over the next 18 months.

Acquisition Cost

The equity expansion even after factoring in conversion of warrants is modest, at about 5 per cent.

However, the amount raised represents only a portion of Dish TV’s Rs 1,200-crore capital expenditure proposed over the next two years. Dish TV’s customer acquisition cost is already at a steep Rs 2,000 per subscriber.

Dish TV, as of end November, had a registered subscriber base of 2.6 million subscribers, still a decent lead over competitor Tata Sky, which expects to close the year with 1.5 million subscribers.

However, competition is intensifying with Reliance ADAG and Bharti Airtel slated to enter the market in early 2008. In order to maintain its top position, it has to step up promotional spends.

There could be more fund raising in store, either in the form of additional debt or further equity expansion, which investors will have to watch out for.

Subscriber Additions

However, given the nascent stage of the DTH market and high growth potential, market observers are likely to give more importance to the pace of Dish TV’s subscriber additions, especially in the wake of heightened competition.

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