Cut Down Taxes - DTH industry to Govt.

DTH operators have urged the government to relook at the four-level tax system as mounting losses have plagued the sector in the wake of an intense competition, rising subsidies, low ARPUs (average revenue per user), and a content regulatory framework. The hardening of the dollar against the rupee has also increased the hardware costs by 10-15 per cent. DTH operators import hardware including the set-top boxes (STBs).

"We are dogged by service tax, VAT (value-added tax), licence fee and entertainment tax. We will approach the government on the tax issues even as we are hit by the softening of the rupee. The hardware prices have gone up by 10-15 per cent because of this," said Dish TV chief operating officer Salil Kapoor on the sidelines of a conference organised by the Cable and Satellite Broadcasting Association of Asia (Casbaa).

Elaborating on the massive losses that confront the sector, Tata Sky managing director and chief executive Vikram Kaushik said the break even period could go over 8-10 years with cost of acquisition of subscribers being as high as Rs 4000-5000 and ARPUs being as low as Rs 100-150. A high churn rate also increases the liability for DTH operators. With the government not allowing content exclusivity, this has only added to the woes of the DTH operators. “In a few years to come, one can expect consolidation or players winding up businesses,” Kaushik added. Big TV DTH head Ashutosh Srivastava said “The price of import of STBs has increased by 25 per cent."

But the DTH operators are still bullish on the growth opportunities. "While we have lots of challenges to overcome, there is still scope for healthy growth. And this can be achieved by offering new and enhanced services to customers," said Srivastava.Agreed Bharti Telemedia executive director N. Arjun: "With the government not allowing content exclusivity in DTH, value-added-services like movie-on-demand (MOV) and pay per view (PPV) will give DTH operators the edge. DTH operators should, thus, look at ways of monetising these interactive services as it also helps in retaining or adding new subscribers," he said.