IPO Alert: Asianet Satellite Communications plans public listing of shares

The Internet and broadband penetration in India has been growing at a rapid pace due to the prevalence of smartphones and other modes of digital communication. The number of internet subscribers in the country increased from 251.6 million in fiscal 2014 to 825.4 million in fiscal 2021, representing a compound annual growth rate of 18%.

Going ahead, the subscriber base is expected to increase by 6-8% and reach 1,050-1,100 million by the year 2025. Internet subscription in rural areas is expected growth by 10-12% by 2025.

Asianet Satellite Communications Limited filed a draft red herring prospectus with the Securities and Exchange Board of India for a ₹765-crore initial public offering. The offering comprises fresh issuance of shares worth ₹300 crores, and an offer-for-sale of shares worth ₹465 crores by promoter Hathway Investments.

Asianet Satellite plans to utilize an estimated amount of ₹160 crores from the net proceeds towards repayment or pre-payment of certain borrowings. The company will deploy ₹75 crores for expanding infrastructure, including optical fibre cables, ONTs, OLTs, ducts and accessories. The remaining amount will be used for general corporate purposes.

ISP

Asianet Satellite is one the leading internet service providers offering broadband service. It is also a multi-system operator that offers digital cable television services. The company predominantly operates in Kerala, amongst other southern states.

The Kerala-based company, which was formed in 1992, had a market share of approximately 19% in fiscal 2021. Currently, it provides 494 television channels including 64 HD channels over its digital cable platform, in a wide range of genres.

Asianet Satellite’s main competitors include telecom players like BSNL, Airtel, Reliance Jio, Vodafone Idea, Den Networks, Hathway Cable & Datacom, Kerala Communicators Cable, Nxt Digital and Siti Networks.

Key Numbers

Asianet Satellite’s net profit grew significantly to ₹31.03 crores in fiscal 2021 from ₹0.29 crore a year ago. Revenue from operations jumped to ₹510.06 crores from ₹450.9 crores. Since February 2020, the company’s broadband business grew at an accelerated pace, mainly due to the COVID-driven shift to remote work/study, increase in the consumption of entertainment content and spike in e-commerce activity.

The company’s business is dependent on its ability to renew existing subscriptions and retain average revenue per user and acquire new subscribers. There is no guarantee that the company would be able to achieve that. Also, competitors might offer less expensive subscription packages, which would result in a loss of subscribers for Asianet Satellite.