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Fitch outlines attractive future for India’s MSOs

The government mandate to digitise India's vast cable TV network will improve the business profile of the country's multi system operators (MSOs) over the medium to long term, according to Fitch Ratings.

Investors will, says the agency, have more trust in the accuracy of subscriber numbers through the introduction of digital addressable systems, and ultimately provide the sector with more capital. Broadcasters are also set to benefit from digitisation if, as Fitch predicts, they negotiate for a better carriage fee from the cable networks.

The drive to digitise India's network by the end of 2014 will, says Fitch, require significant capital expenditure, with investments in digital set top boxes to convert the estimated analogue subscriber base of between 67-68 million.

Fitch expects that MSOs such as Hathway Cable & Datacom and DEN Networks who have already embarked upon the digitisation process will better manage the overall execution and financial risks than others, especially during the initial phase of digitisation.

In the short term, any financial gamble taken by the MSOs will be outweighed by the predicted improved business profile of the MSOs, says Fitch, which also expects consolidation in India's cable TV industry with the advent of digitisation.

Mandatory digitisation will also, thinks Fitch, help the cable TV distribution industry to better compete with the direct to home (DTH) satellite TV platforms. Given the MSOs ability to offer broadband connection and additional services, their operational leverage will improve and generate additional cash flows.

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