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Sun TV could benefit from RCom’s financial troubles

Newer equipment from Reliance Digital TV come with Chois HD 4K branding

Sun Direct, the DTH arm of Sun TV, could end up benefiting from the financial troubles faced by Anil Ambani Group’s Reliance Communications.

Speaking to media yesterday, Reliance Communications top honchos said the company was looking at various ways to reduce debt, including a sale of its DTH business.

However, DTH services are notoriously difficult to sell — or merge — for one key reason: To fully extract the synergy will require the physical reorientation of millions of dish antennas across the country.

A case in point is Dish TV’s purchase of Videocon D2h.

Videocon D2h has about 540 MHz of satellite spectrum that it uses for its carrying its 400 or so channels, while Dish TV has another 830 or so MHz of spectrum, which is being used to beam around an equal number of channels to its users.

The cost of satellite spectrum (or transponder) works out to about Rs 25 cr per year per 100 MHz.

In other words, for a player like Videocon D2h, the transponder cost comes to around Rs 110 cr per year.

In addition, both operators also have separate head-ends or uplinking facilities, which are also quite expensive.

Moreover, both services currently carry more or less the same channels, opening up the possibility of avoiding duplication.

So, logically, the two companies could switch off one of the two beams and save the satellite bandwidth, boosting profits.

But that is easier said than done. If, for example, they switch off the Videocon D2h feed, they will have to get about 13 mln (or 1.3 cr) D2h dish antennas to be turned in the direction of the Dish TV satellite.

At a cost of Rs 150 per re-alignment, this works out to almost Rs 200 cr of expenditure — almost the cost of two years lease on the satellite spectrum.

RELIANCE BIG TV

It is in this context that Sun TV could emerge as a favored suitor for Reliance Big TV, the DTH arm of the Reliance Communications.

Both services beam from the same satellite known as Measat 3, and a merger of the beams can be done using a software update on the set-top-boxes of the subscribers, with no physical reorientation of the antennas.

WIN WIN

Besides helping RCom tide over its financial difficulties, the move could ease the spectrum crunch faced by Sun Direct.

Sun Direct is among the DTH operators that have the least number of satellite spectrum. The operator has only 144 MHz of spectrum on Measat 3. In addition, it recently got another 144 MHz from the nearby GSAT 15 satellite, taking the total to 288 MHz.

However, this is far less compared to other players like Dish TV and Tata Sky, both of which have about 830 MHz.

To compensate for the poor spectrum allocation, Sun Direct entered into an agreement with Reliance Digital TV several years ago to allow its users to receive some channels that are broadcast by Big TV using its 324 MHz of spectrum on Measat.

Because of the spectrum crunch, the Chennai-based player has been able to add only 55 HD channels on its network, while Tata Sky has 85 channels and Airtel Digital is at around 70 channels.

An outright purchase of Reliance Digital TV will help Sun Direct increase its spectrum holding to 612 MHz and add another 30 or so HD channels.

On the other hand, RCom is reported to have some plans of expanding its DTH service by introducing a 4K service and rebranding it as Chois HD. A sale would put paid to such plans.

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