GTPL Hathway Ltd Q4 FY23 Earnings Conference Call Insights

Key highlights from GTPL Hathway Ltd (GTPL) Q4 FY23 Earnings Concall

Q&A Highlights:

• [00:07:16] Yash Sarda from Sushil Finance asked about any update on GTPL Genie and how many from existing broadband have opted for the plan. Anirudhsinh Jadeja MD said as of April, 12,000 subscribers have taken Genie+ service since its launch in Dec., with 8,000 from broadband and 4,000 from cable.

• [00:07:43] Yash Sarda with Sushil Finance queried about the conversion of cable TV subscribers to broadband due to OTT and IPL streaming. Anirudhsinh Jadeja MD clarified there has been no noticeable effect of JioCinema’s free services on subscription rejection or subscriber reduction due to the IPL.

• [00:11:45] Aniket from BMSPL asked what will happen to broadband business ARPU in the next 2-3 years with the emergence of OTT providers such as Reliance. Anirudhsinh Jadeja MD answered that GTPL has increased ARPU from INR400 to INR460 over the last two years and plans to keep increasing it by moving lower package customers to higher packages.

• [00:13:46] Karan Mehta from Nirzar Securities enquired if the increase in pay channel costs per year is recurring and what is the percentage increase for the next 2-3 years. Anirudhsinh Jadeja MD replied that GTPL recommends that analysts look at the channel along with marketing and placement revenues. Net pay channel cost is expected to increase by 2-3% over the years, up to INR10 crores, out of subscription contributing INR25-27 crores.

• [00:15:13] Karan Mehta from Nirzar Securities enquired about the replacement cycle for fixed assets in both of GTPL businesses. Anirudhsinh Jadeja MD answered that fixed assets such as SPBs and routers have different depreciation times. SPB’s depreciate in 8 years, while routers depreciate in 8-10 years. This means that it takes 8-10 years to replace any fixed asset, as the boxes deployed in 2011-2012 are still going strong.

• [00:16:26] Karan Mehta from Nirzar Securities asked about the incremental cost and depreciation cost per subscriber for both of GTPL businesses. Anirudhsinh Jadeja MD answered that the incremental operating cost for adding one subscriber is around INR30. Depreciation per subscriber is around INR90 in the cable side and INR60-70 in the broadband side.

• [00:20:45] Pawan Nahar asked about capex plans for FY24. Anirudhsinh Jadeja MD said GTPL spent INR468.5 crores on capex in FY23, with broadband capex at INR225 crores and the rest going to CATV. For the next three years, GTPL is aiming to invest around INR1,400 crores, with 50% of that going to each business.

• [00:38:01] Saket Kapoor at Kapoor Company asked what mix between cable TV and broadband does GTPL expect to see, taking into account the increased internet penetration and the laying of optic fiber cables. Anirudhsinh Jadeja MD said that around 60-65% of capex has been in the broadband side in the last six years, and this has resulted in a 3.8x increase in broadband subscribers and 2x growth in the cable side. The cable industry will continue to generate cash and grow by combining services together to offer customers a comprehensive range of products.

• [00:42:53] Saket Kapoor at Kapoor Company enquired about the O&M contract of 17,000 KM of optical fiber for BharatNet. Anirudhsinh Jadeja MD replied that GTPL has the capability to do large projects like the EPC project which was completed last year and it will participate in more tenders as they become available.

• [00:50:47] Rikesh Parekh at Rockstead Capital enquired what’s the medium-term plan for expansion of cable TV business over the next 2-3  years, in terms of expansion and size. Anirudhsinh Jadeja MD said GTPL is expanding its cable side by 1 million subscribers a year and entering new markets, maintaining the same EBITDA margins and recovering any admin expenses incurred within a quarter.

• [00:53:12] Rikesh Parekh at Rockstead Capital asked about the game plan with GTPL Genie. Anirudhsinh Jadeja MD answered that GTPL is offering a B2C product that bundles Cable, Broadband and OTT services. It anticipates good margins on the OTT side and growth in the markets going forward.

• [01:02:00] Yash Sarda from Sushil Finance asked about the avg. earnings per user decreasing in the Internet service business. Anirudhsinh Jadeja MD said GTPL is aiming to grow its subscriber base by 40-50% over the next two years while maintaining its current level of ARPU and enhancing its technology to serve more customers.