DEN Networks Limited · NSE:DEN
DEN Networks — Investor Presentation (November 2010)
26 slides from DEN Networks's investor presentation, November 2010
Slide 1: Corporate Presentation
Corporate Presentation November 2010
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by DEN Networks Limited (the “Company”). This presentation does not constitute or form any part of any offer, invitation or recommendation to purchase or subscribe for any securities in any jurisdiction, and neither the issue of this presentation nor an
Slide 3: Sameer Manchanda, Founder, Chairman & Managing Director
Sameer Manchanda Founder, Chairman & Managing Director 3
Slide 4: Significant Achievements in Three Years Since Our Formation
Significant Achievements in Three Years Since Our Formation Strong Leadership A Leading Indian Cable Industry Player Acquisitions: One of India‟s largest cable players ― Successfully acquired and integrated 78 MSOs since inception Unique Content Partnership: Star DEN JV differentiates DEN Sameer
Slide 5: Investment highlights
#1 Favourable Indian Demographics Strong Industry Fundamentals and Favorable Regulatory #2 Environment #3 Strong Market Position #4 Proven Track Record of Delivering Rapid Growth Diversified Offerings Across Value Chain #5 #6 Significant Growth Opportunities Ahead #7 Delivering Strong Gro
Slide 6: Favourable Indian Demographics
#1 Favourable Indian Demographics Compelling Macroeconomic and Demographic Trends India is the 4th Largest Economy by GDP Globally(1) And Among the Fastest Growing Globally(2) (US$ Tn) (US$ Tn) 20.0 2009 GDP at Purchasing Power Parity 12.0% GDP Growth: 2009 to 2012E CAGR 10.6% 10.0% 16.0 14.3 8.6% 8
Slide 7: Favourable Indian Demographics: Growing Middle Class and Rising Incomes
#1 Favourable Indian Demographics Growing Middle Class and Rising Incomes Rapidly Growing Indian Middle Class Rising Disposable Income (mm Households) (US$ bn) Indian Households with Annual Income Aggregate Disposable Income Between $4,300 and ~$22,000 140 128 2,500 120 1,918 2,000 100 1,500 80 61 6
Slide 8: Strong Industry Fundamentals
#2 Strong Industry Fundamentals Large And Underpenetrated Market With Room for Growth Snapshot of Indian TV Market1 Media Spend Lags Global Economies (% of GDP) 1.3% $491 $343 $251 $27 $4 Total Households 223 MM 1.08 % 1.0% 0.90 % 0.78 % 0.75 % 0.8% 134MM TV Households 0.5% 0.41 % 0.3% Cable & Satel
Slide 9: Television Expected to be One of the Fastest Growing Segments
#2 Strong Industry Fundamentals Television Expected to be One of the Fastest Growing Media & Entertainment Segments India’s Entertainment and Media Industry Revenues (US$ bn) FY 09-14 CAGR (%) $23 $25 (Rs. 1,091) 13% $21 (Rs. 956) 4 20% $18 $20 (Rs. 835) $16 3 3 9% $14 (Rs. 742) 2 $13 3 $15 $12 (Rs.
Slide 10: The TV Industry Value Chain in India Today
#2 The TV Industry Value Chain in India Today DTH Content Content Broadcaster IPTV User Developer Aggregator MSO LCO Multi System Operator Local Cable Operator Broadcaster Content Aggregator DTH (MSO) (LCO) Presently over 460 Distribution agent for Receive broadcaster LCOs, acting as Mainl
Slide 11: Indian Cable & Satellite Market is Set for Transformation
#2 Indian Cable & Satellite Market is Set for Transformation Digitization Driving Cable Sub Growth(1)… … And Increasing Share of Subscription Pie(2)… Households (mm) 2009 2014 2020 FY08-14 138 MSO IPTV IPTV 140 130 CAGR MSO 7% 2% MSO 3% 121 DTH 12% 16% 112 12% LCO LCO 114 102 55 LCO 37% 28% 56 (4)%
Slide 12: Regulatory Impetus For Digitization
#2 Regulatory Impetus For Digitization Sunset of Analog Cable Industry regulator, TRAI(1), has proposed a 4-phase migration from analog cable TV to fully digital addressable systems Phase IV Deadline: Phase III 31-Dec-2013 Deadline: Phase II 31-Dec-2012 Deadline: 31-Dec-2011 Rest of India (mostly ru
Slide 13: Regulatory Impetus: Lower Costs and Access to Capital
#2 Regulatory Impetus For Digitization Lower Costs and Access to Capital TRAI Has Recommended Several Incentives for Cable Companies To Promote Digitalization Customs Waiver Increased Income Tax Right of Way For Incentive on Headends & Foreign Holiday Cable STBs Investment Cable companies Duties
Slide 14: Strong Market Position: Cable TV
#3 Strong Market Position: Cable TV Broad Geographic Footprint Presence in Key Markets(1) Strong Brand 10mn Haryana Households(2) Top 2 Delhi & NCR Metros by Uttar population Rajasthan Pradesh Gujarat Madhya Pradesh 7 out of 10 top cities by population Maharashtra Karnataka 9 out of 15 top states by
Slide 15: Strong Market Position: Distribution
#3 Strong Market Position: Distribution Star DEN JV has Exclusive Distribution Rights to 29 Channels Select Channels General Entertain- ment Movies / Music / Lifestyle News Regional Other Channels 15
Slide 16: Proven Track Record of Delivering Rapid Growth
#4 Proven Track Record of Delivering Rapid Growth Strong Market Position in Three Years DEN Today Comments Controlling Stake in 78 MSOs Successful acquisition and integration of MSOs 10.0 MM Households1 Presence across 84 cities with digital cable offered in 47 cities Presence in 84 Cities
Slide 17: Diversified Offerings Across Value Chain
#5 Diversified Offerings Across Value Chain DEN’s VAS: Consumer-Focused, Music & Blogging: Differentiated Apps for Value-Added Content Indian TV Non-stop, radio-style music service Gaming Choice of 10 genres, including local content Visual details of all songs as they play - Music Education¹ S
Slide 18: Significant Growth Opportunities Ahead
#6 Significant Growth Opportunities Ahead Strengthen Market Position Increase penetration in existing markets Pursue Growth and Digitalization Expand into new territories Increase Profitability Conversion of analog homes to digital Consolidation to drive strong revenue growth Increase digita
Slide 19: Exploit Operating Leverage in Business Model
#6 Significant Growth Opportunities Ahead Exploit Operating Leverage in Business Model Expand Beyond Video Services Raise ARPU Through VAS Increase Addressability Potential triple play with broadband and voice Increase ARPU through pay services Raise declaration levels ― VOD, PPV, HDTV etc Rev
Slide 20: Consolidation: Indian cable market fragmented and under penetrated
#6 Significant Growth Opportunities Ahead Consolidation The Indian Cable Market is Still Fragmented.. … And Significantly Under Penetrated Share of Cable TV Subscribers(3) 90% 120% 79.3% 80% 98.9% 100% 70% 66.6% 60% 80% 72.2% 53.7% 50% 59.8% 60% 40% 37.8% 35.2% 30% 40% 20% 12.6% 20% 10% 3.5% 0% 0% 4
Slide 21: The Road Ahead: Our Vision
#6 The Road Ahead: Our Vision A Leading Player in TV Cable TV & Converged Services Broadcasting & Distribution A leading cable distribution company Broadcasting 40-50 own brand local cable channels across India Digital cable & VAS Leverage strategic distribution venture (Star-DEN) Converge
Slide 22: Financial Profile: Strong Revenue Growth Across Segments
#7 Financial Profile Strong Revenue Growth Across Segments… Consolidated Revenues Cable Revenues US$ (mm) US$ (mm) 250 125 $96 $75 (4,434) $201 100 (3,443) $54 (9,256) 75 $45 (2,506) 200 (2,073) 50 $156 25 (7,194) 0 150 FY09 FY10 6M FY10 6M FY11 $110 $95 (5,058) (4,383) DEN’s Share of Star-DEN Reven
Slide 23: Financial Profile: Operating Leverage
#7 Financial Profile …Coupled with Operating Leverage... Consolidated Operating Expenses as a % of Total Revenue 70.0% 18.0% 61.1% 16.0% 50.0% 59.5% 160 bps 14.0% 12.8% 12.0% 10.9% 240 bps 10.4% 9.4% 150 bps 10.0% 8.0% 7.0% 6.6% 6.1% 50 bps 280 bps 6.0% 4.2% 4.0% 2.0% 0.0% Content Cost Placement Fee
Slide 24: Financial Profile: Driving Profitability
#7 Financial Profile ... Driving Profitability Consolidated EBITDA & Margins Consolidated Net Income & Margins US$ (mm) US$ (mm) 1.5% 10.4% 9.0% 13.5% NM 3.9% 1.9% 6.7% 25 10 $21 $8 (962) (364) $7 8 (339) 20 6 $15 (685) 4 15 $2 (85) 2 $9 10 (394) 0 -2 5 $2 (108) -4 ($4) 0 (-172) -6 FY09 FY10 6M FY10
Slide 25: Financial Profile: Revenue Growth and Margin Expansion
#7 Financial Profile Delivering Industry Leading Revenue Growth and Margin Expansion FY2010 Revenue Growth (US$ MM) Comparison With Listed Players Competitor A Competitor B 250 200 201 159 200 144 67 156 150 80 60 150 60 100 100 40 50 50 20 0 0 0 FY2009 FY2010 FY2009 FY2010 FY2009 FY2010 FY2010 EBIT
Slide 26: Thank You
Thank You Cn = nF 26