Technical Analysis


K. Venkatasubramanian | Updated on July 30, 2011


BL31 Den BW.eps

Cable distributor Den Networks' stock has taken a hammering at the markets over the past one year.

The company has a limited history of just 2-3 years in operation, but has quickly scaled up by acquiring majority stakes in multi-system operators (MSOs) across nine states in India.

In FY11, while revenues expanded by 12.5 per cent over the previous fiscal to Rs 1,023.9 crore, net profits rose 26.8 per cent to Rs 38.1 crore.

The Information & Broadcasting Ministry has mandated complete digitisation of cable networks in metros by March 2012. Pan-India digitization is to be completed by December 2014. This move is supposed to provide suitable thrust for players such as Den Networks to acquire analogue MSOs, complete the digitisation process and drive higher revenues.

But the cable industry, however, may face several scalability hurdles, with the limited growth in television households, the slow pace of conversion of analogue networks to digital ones and within that conversion of free-to-air viewers to pay-channel mode. All of these are subject to uncertainty.

Analysts too perceive that the pace of digitisation for operators such as Den Networks has slowed down over the past few months.

The other major hurdle comes in the form of competition from platforms such as DTH where subscriber additions have been robust. DTH operators now add over one million subscribers every month and have also been able to drive average revenues per user (ARPU) by increasing focus on delivering value-added services.

Published on July 30, 2011

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