Cable stocks jump on digitisation move

Our Bureau Updated - April 15, 2011 at 10:45 PM.

Analysts do not feel this as game changer for the industry

The pronouncement of a final switchover schedule (from analogue to digital platform) for the cable TV distribution business has brought a sense of relief to the street. Stocks of these businesses saw prices firming up but analysts seem to take the developments with a pinch of salt.

The two major listed stocks in the cable distribution business, Hathway Cable and DEN Networks rose 11 per cent and five per cent respectively over their previous close. They closed at Rs 119.45 and Rs 96.8 to a share respectively on the BSE.

“It's too good to be true,” said Ms Preeti Samtani, Vice-President, Institutional Equities at GEPL Capital. “This business is ridden with too much of politics and the only expectation is that the sanctity of dates announced should not be tinkered with,” she added.

“These dates were long overdue,” said Mr Gaurav Dua ,Head of Research, Sharekhan, “Though good for the cable distribution business and broadcasters because under-reporting cases would be minimised, this announcement is certainly not a game changer,” he added.

Deadline

The Information and Broadcasting Ministry revised the sunset date for mandatory digitisation of cable TV services across India recently. All four metros would go digital by March 31, 2012 and the rest of India by December 31, 2014.

Analysts are confident that the malaise of under declaration of subscribers that was rampant in the analogue system especially by the last mile cable operators would be contained.

“Businesses would be able to reap the benefits of economies of scale that was envisaged when this business came into being,” said an analyst of a large Indian brokerage.

The other business that would see a rapid addition in subscriber base would be the DTH platform. However, carriage and placement fees paid by broadcasters to multi-system operators for prominently placing their channels are expected to go down, said analysts.

Those keenly tracking the business say there is one practice that is extremely difficult to identify and contain irrespective of the platform, analogue or digital. It is the unwritten agreement between the employees of cable operators and the subscribers to use a single connection for multiple TV sets within the same household.

Published on April 15, 2011 17:14