Profit outlook india,nov 2009

Established in 2007, Den Networks is a relatively a new player with limited operational history. The
operator provides cable television services in states such as Delhi, UP, Rajasthan, Maharashtra,
Gujarat, Karnataka, Haryana, Madhya Pradesh and Kerala. “We believe that operating in these
states provides us with the opportunity to expand our business significantly, particularly in UP,
Rajasthan and Madhya Pradesh, which are among the Indian states with the lowest degree of cable
television penetration,” says Manchanda.

However, the company has scaled up its operations primarily through acquisitions. In the first nine
months since its inception, DEN acquired a majority interest in the businesses of 22 MSOs across
the country. Since March 31, 2008, it has acquired a majority interest in another 40 additional MSOs.
Currently, the company has 10 million analog cable TV subscribers and has managed to garner 0.3
million digital cable subscribers following the launch of Digitelly in February 2008.

More importantly, Den has an equal joint venture with Star India, which has the exclusive rights to
distribute 23 television channels, including the entire Star and Disney group of channels to providers
of various television distribution platforms, such as cable TV, DTH and IPTV, in India, Bhutan and
Nepal. As a result, Den has two main revenue streams, revenue from the venture and the cable
distribution system. Of the Rs 712 crore of revenues reported in FY09, almost Rs 360 crore came
from the JV and the rest from the cable business, which consists of subscription revenues and
carriage fees. The company, however, did not give the breakup of its subscription and
carriage fees.

Growth strategy

Den is investing the IPO proceeds for the development of cable television infrastructure and
services, cable broadband infrastructure and services, and acquisition of content and broadcasting
rights. According to Manchanda, the investments in suitable hardware and software will give Den the
ability to further integrate its business and enable it to broaden the scope and quality of services and
increase its market presence.

The company will invest Rs 210 crore in the ongoing digital rollout in all the markets that are
currently serviced through analog infrastructure and introducing them in markets where Den intends
to expand in the future. “We don’t believe in going city-wise, we decide state-wise. That gives us
also the advantage of putting local/regional channels on the network,” says Anuj Gandhi, chief
executive officer of Den

the cost of customer acquisition is the costliest at around Rs 2,800-3,200 per subscriber. In fact,
Jawahar Goel, managing director of Dish TV, had commented that to attain growth levels that the
industry expects, it would have to collectively spend Rs 500-600 crore annually on marketing and
customer education

Source: Indiantelevion jun 2010

MUMBAI: Sameer Manchanda-promoted Den Networks will continue to grow in size this year, building up a revenue
nest of Rs 11.50 billion as it consolidates its subsidiaries.
The multi-system operator (MSO) with a pan-India footprint will, thus, see a 25 per cent revenue upswing over the
earlier year.

Carriage revenue from broadcasters, standing at almost Rs 2 billion in FY’10, will see a 10-15 per cent growth in the
fiscal.

The company expects its operating profits to jump over 50 per cent to Rs 1.60 billion.

“We will see the full impact of the subsidiaries this year. The carriage market is also picking up. Our targets are well
within achievable reach,” says DenNetworks president – strategy and business development M G Azhar.

The fourth-quarter financials of FY’10 are an indicator of Den’s growth this fiscal. The company posted a revenue of
Rs 2.46 billion and operating profit of Rs 320 million. “We had almost consolidated all our subsidiaries which reflected
in our fourth-quarter results,” says Azhar.

Den plans to invest Rs 1.50 billion during the current fiscal even as it intends to speed up its digitisation drive.

The MSO will pump in over Rs 1 billion as it expects to add 700,000-800,000 digital subscribers during the fiscal. Den
already has 425,000 digital subscribers.

Den will also put in one-fourth of its year’s investments towards acquisition of cable networks.

“We have an investment plan of Rs 1.50 billion in FY’11. We hope to cross one million digital subscribers by then,”
says Azhar.