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Videocon’s DTH arm files documents to raise up to $115M in IPO

01 October, 2014

Videocon d2h Ltd (formerly Bharat Business Channel Ltd), which runs the direct to home (DTH) business for Videocon Group, has refiled its draft red herring prospectus (DRHP) to raise as much as Rs 700 crore ($115 million) through its maiden public issue.

This is the second time the firm has proposed to go public. It had previously filed documents in December 2012 and had received a go ahead from securities market regulator SEBI but did not go ahead with the public float.

At that time too it had planned to raise up to Rs 700 crore.

The digitisation move, which has made it mandatory for existing cable TV homes to switch to digital signal across India over a period of time, is expected to benefit both digital cable players such as PE-backed DEN Networks, and Hathway Cable as well as DTH firms.

Both, the top two digital cable companies (DEN and Hathway) and the top DTH firms (Dish TV and Tata Sky) are backed by private equity firms.

Here’s snapshot of the proposed IPO

– Issue size of up to Rs 700 crore, through fresh shares.

– Axis Capital, UBS, Edelweiss, ICICI Securities, IDBI Capital, SBI Capital and Yes Bank are the joint global co-ordinators and book running lead managers (BRLMs) to the issue.

Use of proceeds

– Around Rs 350.8 crore to fund expenditure towards acquisition of set-top boxes, outdoor units and accessories.

– Rs 175 crore for repayment/prepayment of certain debt.

– Up to Rs 175 crore for general corporate purposes.

Promoters

– The Dhoot family which controls the Videocon Group owns 100 per cent stake in the DTH unit. The Group has business interests spanning consumer electronics and appliances, electronics retail, DTH, oil & gas exploration among others.

Business

– The firm is into DTH business and is one of the half dozen national service providers besides Dish TV, Tata Sky, Sun DTH and Reliance Big TV; only Dish TV is a listed peer.

– Started operations in July 2009 and has grown its gross subscriber base to 10.45 million as of March 31, 2014, representing approximately 15.7 per cent of the total DTH subscriber base in India.

– As of June 30, 2014, it had 11.21 million gross subscribers.

– As of June 30, 2014, it offered over 495 national and international channels and services, including 27 HD channels and 41 audio and video active music channel services.

Financials

– Its total income for the three months ended June 30, 2014 and the financial year ended March 31, 2014 was Rs 537.7 crore and Rs 1,760.8 crore, respectively.

– In the same period it generated net loss of Rs 78.15 crore and Rs 469.3 crore, respectively. The fir has clocked net loss of Rs 2,126 over the last five years.

– Dish TV, the only listed peer, generated revenues of Rs 2,509 crore with net loss of Rs 157.6 crore in FY14. This means Dish TV, which has been in the business far longer, is generating lower losses for every extra revenue earned. Dish TV has a market cap of Rs 5,750 crore.


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Videocon’s DTH arm files documents to raise up to $115M in IPO

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