GTPL Hathway sees headroom for growth in digital cable TV

GTPL Hathway is well place to leverage growth opportunities because of lower digital TV and broadband penetration in India, says Anirudhsinh Jadeja, Managing Director of GTPL Hathway, in the company's latest annual report.

Less than 70 percent of the 300 million households in India have cable and satellite TV services, according to GTPL Hathway's estimates.

GTPL Hathway is a multi-service operator (MSO) in India engaged in cable TV and broadband service distribution. It is the largest player in Gujarat, and a leading player in West Bengal.

The emerging threat to digital TV providers are OTT (over-the-top) platforms like Netflix and Disney Hotstar, as smartphone sales grow in the country. Although the cable TV operators have cracked monetisation, there is a need for innovation to win young audiences, notably millennials.

Towards this end, GTPL will launch a hybrid set top box soon. This will enable customers without smart TVs to experience OTT services along with regular digital TV services on their television sets. The company also plans to cross-sell broadband services to its digital cable TV subscribers, as a combined service. It is expanding to new regions like Tripura, Meghalaya, and Manipur.

Though TV viewership spiked as the country went into lockdowns because of the COVID-19 pandemic in the first half of fiscal year 2021 (FY 2021), the curve normalised after October to pre-COVID levels. TV continued to play a vital role in disseminating information, clarifications and steps taken to counter the pandemic by the Government, because of its deep penetration across the nation.

GTPL Hathway strengthened its active digital cable TV subscriber base to 10 million during the year. Its consolidated revenue from operations grew 3.5 percent to Rs 2,467 crore in FY 2021.

Digital Cable TV subscription revenue grew 4 percent to reach Rs 1,071 crore in FY 2021 against Rs 1,031 crore in FY20. The company reported a profit of Rs 210.8 crore in FY 2021, up 142 percent over the previous year.

Growth focus on rural regions

Non-prime time (NPT) TV viewership grew 44 percent, while the prime time (PT) viewership grew by 3 percent, according to consulting firm BCG's Media and Industry Report 2020. The contribution of TV minutes from rural areas has increased in 2020 over the previous year.

The average revenue per user (ARPU) has increased since the New Tariff Order imposed by the Telecom Regulatory Authority of India (TRAI) in Feb 2019. The ARPU growth has been led by rural and semi-urban markets.

GTPL completed 98 percent implementation of the end-to-end optic fibre cable (OFC) of 17,000 kms and digital infrastructure to connect 3,767 gram panchayats as a Project Implementation Agency for Package B of Bharat Net Phase-II project during FY 2021.

After this, it began operations and maintenance of the infrastructure as part of the contract. GTPL plans to expand its businesses into rural areas by leveraging this project.

GTPL also provides economical and high-speed broadband services to its customers via advanced Gigabit Passive Optical Network (GPON) technology. It is the sixth-largest private service provider of the wireline broadband services.

It upgraded its network to GPON FTTH (fibre to the home) technology-enabled GTPL to launch ‘Unlimited data’ and high-speed services for retail consumers in Gujarat, with options ranging between 40 and 100 megabits per second (Mbps).

This helped to gain new customers who were being gained in the higher speed plans yielding higher ARPUs. The “Truly Unlimited” plan has transitioned over 99 percent of its customer base to unlimited data consumption plans

GTPL Hathway's internet service provider (ISP) segment clocked Rs 279 crore in FY 2021 revenue, against Rs 167 crore in FY 2020, growing 67 percent in the period. It added 540,000 new home-passes with a growth of 16 percent  in FY 2021.

As part of its strategy to convert its broadband customers to FTTX, GTPL Hathway has 3.87 million broadband homepass with 65 percent of these for conversion. The broadband business has reached 6.35 lakh subscribers as of March 2021, with an addition of 2.3 lakh new subscribers during FY 2021 with a growth rate of 57 percent.

The ARPU grew consistently and stood at Rs 445 in FY 2021, 5.5 percent over the previous year. Data consumption grew 31 percent from 162 GB per customer per month in March 2020 to 212 GB per customer per month in March 2021.

Sustainable business model

Competitors like Sterlite Technologies, Bharti Airtel, and others who also operate in international markets have been actively working on innovating new technologies such as 5G, Open Radio Access Network (RAN).

Compared to them, the bigger question is would expanding to a semi-urban and rural business model be sustainable for GTPL Hathway when there is a mobile revolution? Can these companies keep the mind share with OTT players entering the fray?

Jehil Thakkar, Partner, Media and Entertainment, Deloitte India, says this is a sustainable business model. “The future is in broadband, with FTTH leading it. As the demand for content rises, providing newer technologies to their existing customers would be the next major focus,” he told EnterpriseStory.

As it is, 83 percent of the consumption happens through mobile. When 5G gets deployed in the country, the biggest challenge for cable TV companies will be wireless. But the threat from OTT platforms has a long way to go even though its penetration may have been spectacular in the past three years.

“In India, at the least, cord cutting is not happening as it's not a replacement story. Consumers are not giving up cable TV for OTT,” said Thakkar.