Imported set top boxes to cost more, DTH operators unhappy

[IndianMascot]

Watching cable and satellite TV may turn expensive with the government proposing to double import duty on set top boxes (STBs) to 10 per cent but domestic manufacturers have welcomed the move. Reacting to Finance Minister P Chidambaram's announcement to hike import duty on STBs from the existing 5 per cent, DTH Operators Association of India President Harit Nagpal said "the increase seems out of place".

"The DTH industry is already paying 32 per cent of its revenue as taxes. At a time like this, when the government's digitization mandate is entering its second phase, the industry requirement is many times over normal and there is no local manufacturer of repute who can deliver quality boxes in such quantities," Nagpal, who is also Tata Sky MD & CEO said.

The move may push up set top box prices by about Rs 50-60. Industry body Ficci expressed "shock" at the proposal saying the increase would be "detrimental" to the government's digitalisation programme. "This sharp increase in import duty would escalate the costs for consumers and can potentially derail the digitalisation process," FICCI Chairman (Media and Entertainment Committee) Uday Shankar said.


Wish to Read Further, ----->

 

[harshbardhan]

The govt.'s policy is to pile up money from every possible sources by sqizzing it to the last drop. Then spend the money so earned on unproductive populist projects which may produce votes later on.

 

[IndianMascot]

Dish TV, Hathway unshaken


As digitisation is mandatory, the move might not impact subscriber addition, but will increase the total price of one STB by Rs 80-100 if the entire hike is passed on. The cost of an STB is between Rs 1,500 and 2,000 a piece. Given their over-leveraged balance sheets, these companies cannot absorb the cost increases and, hence, are likely to pass it on fully to the end consumers, believe analysts.

Each of these companies is likely to add 2.5-3.0 million STBs annually. Analysts believe this move will increase the annual capital expenditure of the DTH/cable companies by Rs 25-30 crore each.

"The move is negative for the industry and we believe the companies will pass it to the end consumer. While the impact will not be very large, the move should have ideally been announced a year back", said Abneesh Roy, associate director, institutional equities, research, Edelweiss Securities.

Among the domestic players, Videocon is the only large company that manufactures STBs. Thus, the cable and DTH companies will continue to depend on imported STBs. Overall, analysts continue to remain bullish on the MSOs and DTH scrips.


Dish TV, Hathway unshaken | Business Standard