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Though the Government has hiked customs duty on the import of set-top boxes (STBs) to boost domestic manufacture, it is likely to add to the cost burden of a majority of Direct-to-Home (DTH) and Multi System Operators (MSOs). Barring some players, such as Videocon D2H, most other big DTH companies and MSOs import set-top boxes as of now.
Salil Kapoor, Chief Operating Officer, Dish TV, said, “The doubling of customs duty on set-top boxes could lead to a slowdown in the pace of digitisation. The players already offer the boxes to consumers at subsidised rates and bear the burden of multiple taxes. How much more can the companies absorb?” He said the hike in the customs duty could potentially lead to a price increase.
Echoing similar views, Harit Nagpal, President of the DTH Operators Association of India and MD & CEO, Tata Sky said, “The DTH industry is already paying 32 per cent of its revenue as taxes. At a time like this, when the Government’s digitisation mandate is entering its second phase, the industry requirement is high and there is no local manufacturer of repute who can deliver quality boxes in such quantities. Therefore, this increase seems out of place and in all fairness should be reversed.”
While some players believe this move could lead to a price increase, others pointed out that given the cut-throat competition with the ongoing digitisation between cable and DTH companies, it would be difficult for players to pass on the hike to consumers.
Smita Jha, Leader - Entertainment and Media, PwC India, said the ground reality showed that there was not sufficient domestic supply of set-top boxes and players would have to continue to import set-top boxes. “This will hurt the players, as completely passing the cost to consumers is not viable, given the fact that the DTH and cable industry are encouraging consumers to go digital,” she added.
Stating that the move would hurt cable companies, Ravi Mansukhani, MD, IndusInd Media and Communications, the MSO of the Hinduja Group, said MSOs were already investing and trying to raise huge amounts to bear the cost of digitisation.
FM radio expansion
Meanwhile, the Finance Minister also proposed expansion of private FM Radio services to 294 additional cities, and said about 839 new FM radio channels would be auctioned covering cities with a population above one lakh.
Tarun Katial, CEO, Reliance Broadcast Network, said phase III was poised to create optimal reach for the medium. “Other benefits like news, networking, current affairs and sports and multiple frequencies will give a fillip to expand listenership through reach and content diversification and will also drive profitability and revenue through cost optimisation,” he added.
Analysts believe that if the licence fee is not reduced, it could make operating a large chunk of frequencies commercially unviable.
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