Spa Research
Siti Cable (Buy)
CMP: ₹31.70
Target: ₹52
SITI Cable Network Ltd (erstwhile known as Wire and Wireless [India] Ltd) is a leading cable television distribution company with subscriber universe of 1.05 crore spread across 130 cities across 17 States. Its cable network is supported by 15 digital head ends and approximately 15,400 kilometres of HFC network.
SCNL will emerge as one of the prime beneficiary of cable digitisation and consolidation of multi-system operators with SCNL’s pay-TV market share improving to about 14 per cent by FY20E from 10.5 per cent in FY15 and average revenue per user (ARPU) improving by 3.5x. With the formation of Comnet, SCNL is better placed compared to its competitors in managing content cost in-line with growth in ARPU. SCNL has aggressive target of acquiring 20 lakh broadband subscriber by FY18E and plans to transform itself into broadband company by 2020. While the target is stretched, we believe that there will be significant traction in broadband business given SCNL’s focus and its better control of local cable operators. Going forward, steady growth in pay-TV & broadband subscriber base coupled with improvement in subscription revenue will instil investor confidence in the stock.