Hathway Cable & Datacom Ltd Q2 FY18 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Management growth scorecard
Revenue
Category 3
Margin
Category 3
Fundraise
N/A
Order
N/A
Capex
Yes
1 of 3 growth signals are positive — mixed outlook.
Full analysisRevenue guidance
Category 3- Broadband revenue growth is expected to come from acquiring more high-usage consumers (100+ GB/month) and increasing net additions, with signs of improvement post-September 2017 as churn stabilizes and consumer retention improves.
- Phase III and Phase IV cable markets are anticipated to drive ARPU growth, moving from current Rs.30-41 levels to Rs.60 and eventually Rs.90, through increased digitization and higher-quality offerings.
- Introduction of HD boxes and connected (internet) TV boxes in Phase II, III, and IV markets will further enhance ARPU and revenue growth in upcoming quarters.
- Cost reductions via process re-engineering and automation bolster EBITDA, supporting sustainable revenue growth without compromising consumer value.
- The GPON Fiber-to-Home rollout targeting premium consumers with high speeds (up to 200 Mbps) and data limits (1000 GB/month) is expected to yield higher ARPU and stickiness.
- Monetization of Phase III and Phase IV cable boxes is a key focus area to accelerate revenue growth in next two quarters.
See what Hathway Cable & Datacom Ltd management said on margin guidance — free account, 30 seconds.
Fundraise plans
- There is no specific mention of any current or future new fundraising through debt or equity in the transcript.
- The company reported a reduction in net debt by Rs.108 Crores compared to Q1 of FY2018, indicating focus on debt reduction rather than raising new debt.
- Gross debt stands at Rs.1,621 Crores, with net debt at Rs.1,578 Crores as of Q2 FY2018.
- The management's focus is on cost optimization, EBITDA growth, and organic expansion in broadband and cable segments.
- No announcements or indications of plans for new fundraising through debt or equity were discussed during this concall.
See what Hathway Cable & Datacom Ltd management said on order book — free account, 30 seconds.
Capex plans
Yes- Incremental capex per subscriber for GPON fiber-to-home upgrade is around Rs. 3,000 with a payback period of about 30 months.
- Capex per broadband subscriber on GPON has fallen to around Rs. 8,000 or below.
- No significant incremental capex for DOCSIS 3 to 3.1 upgrades as prices have fallen and technology pricing is equivalent.
- Investments ongoing in GPON fiber deployment primarily in premium areas where DOCSIS penetration has already reached 20%.
- Digital transformation initiatives involve automation, process re-engineering, and right-sizing operations to achieve structural cost savings.
- Phase IV network seeding completed and monetization efforts underway.
- Pilots underway to leverage synergies between video and broadband businesses, with strategic propositions being tested in select markets.
- Investment in new data centers and content hosting alliances (e.g., Facebook server hosting, Microsoft cloud services) to improve broadband user experience and stickiness.
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Margin guidance
Category 3- Broadband business PAT increased 50% from Q1 to Q2 FY2018, reaching Rs. 15.3 Crores, indicating strong profit growth momentum.
- EBITDA for broadband and CATV combined rose 12% QoQ and 63% YoY, demonstrating consistent earnings expansion.
- Focus on increasing revenue through higher ARPUs in Phase III and IV markets, with expected ARPU growth towards Rs. 60-90 over time.
- Broadband growth driven by added subscribers (100,000 added in calendar year), though revenue growth is tempered due to value-added packs with longer pay terms.
- Cost reduction and process automation initiatives expected to sustain EBITDA margins above 40%, supporting robust operating profits.
- GPON technology upgrades offer higher ARPU (Rs. 100 incremental) with better EBITDA margins (~5% higher), contributing to future operating profit improvement.
- ARPU expected to stabilize for next 18 months with revenue growth relying on new customer additions.
- Monetization of digital phases and advanced broadband services underpin earnings growth outlook.
Order book
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