Conference Call with GTPL Hathway Ltd and Analysts to discuss Q4FY20 Earnings and Outlook. Listen in to the full transcript

Call Participants:

Mr. Aniruddhasinhji Jadeja (Promoter and MD)

Piyush Pankaj (Business Head - CATV & Chief Strategy Officer)

Mr. Rajan Gupta - Chairman and Non-Executive Director, Mr. Anil Bothra - Chief Financial Officer

Introductory Remarks from Mr. Aniruddhasinhji Jadeja

Good Evening everyone! On behalf of the management of the company, I extend a warm welcome to all of you to the conference call of GTPL Hathway Ltd. to discuss financial and operational performance of the Quarter 4 and the full year ended on March 31, 2020. I believe all of you must be working from home and taking good care of your family and yourself. 

The Covid-19 pandemic has put life and business at significant risk. People are watching more TV in this forced lockdown. Of course, there are operational challenges of working from home except for critical operations. Collection is another issue but more than 80% of our collection is through digital platforms. 

We delivered a strong business and financial performance for the industry. Amidst a year of industry reforms, GTPL Hathway has emerged as a stronger company. Our operating ability to expand our services have improved and so has our ability to generate free cash flow.

The highlight of FY20 was strong profitability, debt reduction and geographical expansion. Our FY20 consolidated revenue and EBITDA grew by 88% and 39%, respectively. We have collected nearly 3,000 gram panchayat of the total 3,600 gram panchayat collective number in our EPC project. Our net debt as on March 31, 2020 stood at Rs 128 crore. The board has recommended a 30% dividend that is Rs 3 per share. 

GTPL Hathway successfully implemented the new tariff order across India and migrated all subscribers to the new regime. The company is the first MSO in industry to offer versatile language wise regional packages providing true choice to customers. With the new tariff order in place, GTPL will now focus on increasing its footprint in the existing market through expansion and will venture into the new market through acquisition and consolidation.

Key Highlights by Mr. Piyush Pankaj

I hope all of you are safe and healthy. GTPL, as many of you know, is one the few consistent profit making cable TV and broadband companies in India. Our business model is quite robust and can explore multiple growth opportunities that this sector has potential to offer. 

Glimpse of our trajectory in the past few years

• Between FY2015 to FY2020, we have doubled our paying subscribers base from 3.4 million in FY16 to 7.5 million in FY20. During the same period, our revenue and EBITDA have grown by 24% and 30% CAGR, respectively. 

• We have been consistently generating free cash flow since FY16 and have managed to reduce net debt by Rs 252 crores in the last four years and have returned money to shareholders in the form of regular dividends. 

• I believe with such strong fundamentals, we are ready to pursue the next phase of growth which has already been put in motion. With that, let’s take a deep dive into the performance for the year. 

Key Highlights of FY2020 (CATV Business)

• During Q4FY20, we have seeded 1,50,000 STBs, taking the total seeded boxes to 10.2 million 

• As of March 31, 2020, paying subscribers stood at 7.5 million, increased by 10% YoY. With that, during FY20, we have seeded 7,00,000 STBs and added 7 lakh paying subscribers 

• Our new customer acquisition campaign loaded 1 lakh new subscribers in FY20

• We have launched 12 new channels in FY20 taking the GTPL owned and operated channel counts to 47. 

• Our consolidated subscription revenue grew by 41% during the year. 

• During the year, we have strengthened our CATV presence in Mumbai and have entered Chennai, Tamil Nadu. We have also expanded our subscriber base in Andhra Pradesh and Telangana in FY20.  

• We are proud to be the first company in the industry, offering versatile language packages to customers. 

• During the year, we have launched the industry’s first reward program, GTPL Pragati to reward our business partners. The program emphasizes on subscribers retention and the reward program offers performance based incentives cashback. 

Key Highlights in Broadband segment

• During Q4FY20, we added 1,70,000 new home-passes and took the total home pass as on March 31, 2020 to 3.33 million.

• During the quarter, GTPL added 30,000 net broadband subscribers, taking the total net broadband subscribers as on March 31, 2020 to 4,05,000 of which 1 lakh are FTTX subscribers

• For the full year, we added 9,00,000 Home Pass. Home Pass, Added 80,000 net broadband subscribers during FY20 and 46,000 FTTX subscribers.

• The data consumption as on March 22, 2020 stood at 162GB per month, per personnel, up by 54% YoY. 

• The broadband ARPU for FY20 is stood at Rs 422, marginally up by 2% YoY

Financial Performance Highlights

• Consolidated business including EPC contract during Q4FY20, GTPL’s consolidated revenue increased by 39% YoY, Rs 485 crores. This was primarily driven by a rise in CATV subscription by 27% YoY to Rs 265 crore. 

• The broadband revenue for the quarter grew by 27% YoY to Rs 46 crores, led by a rise in subscribers. 

• EBITDA for the quarter surged by 8% YoY to Rs 112 crores, with a margin of 23.1% 

• Our consolidated business including EPC contract during Q4FY20, GTPL’s consolidated revenue increased by 91% YoY to Rs 656 crores. 

• EBITDA for the quarter increased by 20% YoY to Rs 125 crore with a margin of 18.7% 

• Our EPC contract during Q4FY20 reported revenue, EBITDA and profit before tax of Rs 182 crores, 12.9 crores and 12.3 crores respectively. 

• We have recognized Rs 68 crores towards impairment of trade receivables. The company has taken impairment of trade receivables in the last year also at Rs 65 crore. Last year, impairment was mainly for the direct business of the company and this year, we have taken for all joint venture companies and took provision of trade correspondents in company books. 

Standalone Business Highlights

• On our standalone business, including EPC contracts during Q4FY20, the company reported revenue of Rs 314 crores which grew by 36% YoY. This was mainly contributed by 20% YoY increase in subscription revenue at Rs 180 crores

• The company reported EBITDA of Rs 63 crores with an EBITDA margin of 20.2%

COVID IMPACT

There is no delay on the EPC front from the company side because of lockdown. Because of the monsoon, there was a delay of almost 60 days in Gujarat. All further delays, down the line and more delays are factored in. We have taken in our financials all those provisions including increase ion labour cost, if any. 

We have seen two trends right now during the lockdown. One trend is that the residential customers have gone up in the last 30 days both under broadband and TV. But the commercial customers which include shops, offices, hotels have come down.

We are not getting renewals for the commercials while there is a surge in the residential connections. Upgradation is happening on the broadband side. The customers are upgrading to higher speeds and cable side also, they are upgrading to higher packages. 

CAPEX for FY19 and the budgeted CAPEX for FY20

For FY19 as we have given the earlier estimation that it is going to be between Rs. 150 crores to Rs. 160 crores. The total CAPEX is coming at Rs. 155 crores out of which Rs. 51 crores have gone into the broadband and rest in CATV business. For next year, on the broadband side, we want to be more aggressive. We are expecting that it is going to be the same as we did in the last year, around Rs. 160 crores. But by end of first quarter we are going to give you an exact estimation of CAPEX in next one year. Right now, the expectation is Rs. 160 crores.