GTPL Hathway Limited (GTPL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the GTPL Hathway's Q3 FY '21 Earnings Conference Call hosted by AMBIT Capital. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vivekanand from AMBIT Capital. Thank you, and over to you, sir.

Good afternoon, everyone. Welcome to the 3Q FY '21 Results Conference Call of GTPL Hathway Limited. We at AMBIT Capital would like to thank the management for giving us the opportunity to host this call. The GTPL Hathway management will be represented by Mr. Aniruddhasinhji Jadeja, Promoter and Managing Director; Mr. Rajan Gupta, Chairman and Non-Executive Director; Mr. Piyush Pankaj, Business Head, CATV and Chief Strategy Officer; and Mr. Anil Bothra, Chief Financial Officer. We will start the call with a brief comment from the management and then move into the Q&A. Thank you, and over to Mr. Jadeja for the opening remarks.

Thank you, Vivekanand. Good evening, everyone. A warm welcome to all of you to the conference call of GTPL Hathway Limited to discuss financial and operational performance of quarter 3 and 9 months ended to December 31, 2020. GTPL Hathway continues to deliver on key KPIs. Despite lockdown and restriction in 9-month FY '21, the key performance highlights are: Improvement in subscription revenue, both broadband and CATV business; strong profitability; debt reduction; geographical expansion; and robust operational performance. We have reduced our net debt by INR 887 million in 9 months FY '21. Our broadband business picked up the pace, resulting in additional 1,85,000 broadband subscribers during first 9 months of FY '21. We are looking forward to close FY '21 on high notes coupled with our plan to launch new products and services in quarter 4 FY '21 along with expanding GTPL's footprint in existing and new markets. With that, I hand over to Mr. Piyush Pankaj, who can take you through the business and financial aspects of the company. Piyush?

Thank you, Mr. Jadeja. Good evening, everyone. I hope all of you are safe and healthy. GTPL Hathway is one of the few consistently profit-making cable TV and broadband company in India. Our business model is quite robust, and can explore multiple growth opportunities that this sector has the potential to offer. In the last 4 years, our CATV active subscriber base has grown sharply by 1.8x to 7.9 million. Additionally, our broadband subscriber base has mirrored a significant growth of 2.3x to 0.6 million. We have been consistently generating free cash flow and have managed to reduce net debt by INR 3,511 million in the last 4 years and have returned money to shareholders in the form of regular dividends. The net debt stands at INR 392 million as on 31st December 2020. As on December 31, 2020, our total seeded STBs stood at 10.61 million and active subscribers stood at 7.9 million. GTPL's digital CATV services reaches 800-plus towns and is spread across 13 states in India with Tripura being the latest addition during 9 months FY '21. Our CATV business expansion will gain momentum with organic and inorganic growth in the coming quarters. The Indian wireline broadband sector is a sunrise industry with huge untapped growth potential. It accounts for meager 6% penetration of the total households in India as against 80% penetration in Japan, 70% penetration in the Eurozone region and 55% penetration in China. The world is moving towards wireline broadband being more stable and on demand of high speed connectivity. This represents a humungous opportunity for a player like GTPL Hathway who is prepared to scale up rapidly. Even on Cable TV front, the penetration level is at just 55% of households in India of TV households. Here too, scope of expansion for us is immense. GTPL has not just resources, systems and processes in place to take the advantage of the opportunity but also has a robust financial fundamental to manage growth. In the broadband segment, we added 4,70,000 new home-pass in 9 months FY '21 and taking the total home-pass as on December 31, 2020 to 3.80 million. During the quarter, GTPL added 55,000 net broadband subscribers, taking the total net broadband subscribers as on December 31, 2020, to 5,90,000. The data consumption as on December 2020 stood at 205 GB per month, up by 63% Y-o-Y. The broadband ARPU for quarter 3 FY '21 grew by 7% Y-o-Y to INR 445 per month. GTPL looks forward to expanding its broadband business by leveraging its existing base of 10.6 million CATV subscribers and attracting new broadband subscribers through business partners. Let us now move to our financial performance. On our consolidated business, excluding EPC contract, during quarter 3 FY '21, GTPL's consolidated revenue grew by 25 -- 21% Y-o-Y to INR 5,530 million. The CATV subscription revenue grew by 5% Y-o-Y to INR 2,718 million. The broadband revenue for the quarter grew by 84% Y-o-Y to INR 778 million, led by a rise in subscribers. EBITDA for the quarter surged by 20% Y-o-Y to INR 1,421 million with a margin of 25.7%. On our consolidated business, including EPC contracts, during quarter 3 FY '21, GTPL's consolidated revenue stood at INR 6,556 million. EBITDA for the quarter increased by 11% Y-o-Y to INR 1,495 million, with a margin of 22.8%. PAT for the quarter surged by 38% Y-o-Y to INR 452 million. Our EPC contracts during quarter 3 FY '21 reported the revenue, EBITDA and profit before tax of INR 1,026 million, INR 74 million and INR 72 million, respectively. On our stand-alone business, excluding EPC contract, during quarter 3 FY '21, the company revenue grew by 9% Y-o-Y to INR 3,495 million. The company reported EBITDA of INR 763 million with an EBITDA margin of 21.8%. On our stand-alone business, including EPC contract, during quarter 3 FY '21, the company reported revenue of INR 4,521 million. EBITDA stood at INR 837 million with an EBITDA margin of 18.5%. PAT for the quarter stood at INR 297 million. This is all from my side. Thank you, everyone, for your attention. We can now begin with the question-and-answer session.

[Operator Instructions] The first question is from the line of Dixit Doshi from Whitestone Financial Advisors.

Congratulations for consistent performance again. Sir, first question was regarding the dividend policy. So we met you a year back and you said that, going forward, we'll continuously increase the dividend. If I see FY '20 performance, we did around INR 7 EPS and paid around INR 3 dividend. And this year, we might end up doing EPS of almost INR 16. So can we expect similar kind of dividend payout percentage?

Dividend policy, as I said in earlier call also that the management has recommended to the Board, and the Board has considered that. But due to the current situation of COVID and all, we have not implemented any dividend policy till date. Yes, last time, we have given 30% dividend at INR 3 per share. We have continued to give the dividend. And as a management, we are going to recommend at least the dividend which we have given last time and more than that. So that's the way the management is going to recommend to the Board.

Because even -- I understand the COVID problem, but our business was not that much impacted. So this was -- so I think we can give a good dividend given that now our net debt is also hardly INR 30 crores, INR 40 crores.

Yes. As a management, as I told you, we are going to recommend it to the Board and -- for the good dividend this time, and we will see that how our Board takes it up.

Okay. Okay, sir. Secondly, sir, so you mentioned that in Q4, we are planning to launch the hybrid box. And I understand, in that, we are planning to give the OTT services also to our customers. So have we done the tie-ups with the OTT platforms? And also, just wanted to understand, so whatever cost we will be paying to OTT platforms, are we going to fully recover and -- on some margin over that from the customers? How it will pan out?

Yes. The OTT agreements and everything is under process. It is almost on the verge of closing with everyone. Some of it has already been closed, some are getting closed. So that services are already on for that. As far as -- you were talking about the margin, yes, we are working on such a way with the partners now that some margins should come to everyone. So that is the way we are going forward. And the pricing and all is going to be attractive for the consumer. We are doing in -- being in such a way. And we are going to come with a bundled product where it is going to be very attractive pricing for the consumer and there is going to be margin for everyone.

Okay. So basically -- just to summarize, so basically, whatever cost we will be paying to OTT platforms, that will be fully recovered from the customers. We are not going to subsidize or anything like that?

Yes, you are right because we are not going to subsidize on the OTT side and all. And where we are going to bundle this, we are going to make it sure that there should be -- it should be EBITDA accretive for the company.

Company. Okay. And how these deals would be -- I mean, is it like a lump sum deal or is it like a per customer kind of deal?

Dixit, can't disclose all those things here. We have the confidentiality agreement with all of them. Can't give those details. Yes, one-to-one, if we can meet and then I can divulge something with you.

Sure. Sure, sir. Thirdly, sir, if I see our EPC business, so I suppose we are at the fag end of the EPC Project. So how much more revenue recognition is remained in EPC segment? And once it is complete, let's say, from next year onwards, we will be having some AMC business also. So what kind of revenue per year in AMC would be?

Right now, if you see, the EPC Project was of INR 1,072 crores. On that, last year, in FY '20, we have taken around INR 652 crores and FY '21, it should come at around INR 420 crores. Out of that, if you see, around INR 200 crores has been taken in these 9 months. Still INR 220 crores is the revenue which has to come from the EPC Project. As far as talking about the O&M, it is a contract of INR 57 crores per annum, which is going to...

7 years.

And this is 3 years plus 4 years. 3 years, it is INR 57 crores. Then again, 4 years, it will increase a bit, next 4 years. So first 3 years, it is going to be INR 57 crores per annum.

Okay. And I understand that in this INR 57 crores, the margins would be very high because the cost will be hardly anything?

Yes, the margin will be high.

Okay. And this INR 200 crore of remaining contract, this will be over in Q4 or it will spill over to next year also?

We are expecting that around 95% will be over by quarter 3. Some spillover will happen, 5% to 7% in quarter 1 FY '22.

Okay. Okay. And sir, in Q2 con call, you were mentioning that most of our write-offs have been done with and there may be some write-backs. So has there any write-back in Q3 results or anything expected going forward?

So last 9 months, actually, we have provided write-backs. And in Q4 also, the business team is actually following up for the -- with the receivables with our customers and trying to recover the money. So we are expecting in Q4 some write-offs also.

Write-backs, write-backs.

Write-backs.

So how much was the write-backs in first 9 months?

In first 9 months, it was almost around INR 39 million.

INR 39 million. Okay. Okay. Okay.

The next question is from the line of Pratiksha Daftari from Aequitas Investment Consultancy.

So my first question is, for the Cable division, the subscriber addition in this quarter seems to have gone down. And last quarter, we had mentioned that there are certain customers, commercial customers who have not yet joined. So if you could just highlight if this issue still persist and what is the expectation going ahead? When do we see the subscriber addition normalizing? And what -- and also on the placement revenue, we've seen a substantial increase on year-on-year basis on placement revenue this year -- so this quarter. So what would that be attributable to?

So first question, Pratiksha, on the corporate customer side, as you know, that suddenly somewhere in the middle of November, again, the things have gone bad on the COVID side and lockdown has started happening in all over India, especially in Delhi, Gujarat, Maharashtra -- Gujarat, Maharashtra where we are doing the business, plus there is lockdowns in Assam and all. So corporate were returning, then again, we have seen that the corporate has gone back from the system. That's why if you see, we have seeded around 200,000 STBs in this quarter. But we have just gained around 50,000 subscribers on the net addition basis. So that's -- we are still waiting for the corporate customers to, again, come back, which we are seeing some trend in the January month that those customers have started coming back. And there is encouragement in the market that vaccines are coming and all. So we are hopeful that we are going to gain those customers back in this quarter again. So that's the one. Placement revenue is going up. You're right, placement and marketing revenues are going up. And this is -- as per the trend if you see from the last 4 quarters, you will see that it is as per the trend on which it is going up. And -- but we are seeing -- we are going to see the plateau at some point of time on this. So we are hoping that -- because the 9 months has gone, so somewhere in the quarter 4, you will see the plateau which will start happening on those. So these 9 months was high growth in the placement and marketing side. So that is maintained. But we are looking forward that some plateau will come in quarter 4 and then quarter 1 FY '22.

And if you could elaborate a little bit about the user additions, the subscriber additions that we are getting in our new markets. So excluding Gujarat and West Bengal, what is the cable TV subscriber additions that we are seeing? And how are they -- like, what's the trend sequentially?

Pratiksha, if you talk about AP, Telangana and the new market, Tripura, these are the 3 markets which you can say, we are expanding in the new side. So out of that, if you -- gross adds, if you talked about, which we are looking at around 150,000 to 160,000 is coming from these 3 markets every quarter, and that's the trend. So in the yearly terms, you can say that we are generating somewhere around 600,000 to 700,000 from the new markets. And that is the obvious trend that -- which we have seen from last 2, 3 years. Whenever you go into the market, it -- you have to make up to a level of subscriber base. After that, your base grows. So that's -- we are at that stage right now. So we are hoping that this year it is like this. But yes, in FY '22, we are going to contribute more for our growth.

Okay. And so what are the -- what is our target or aspiration on home-pass additions, say, for FY '22? And what kind of cost do we incur for -- like is it possible to quantify the cost of the CapEx that we'd incur for 1 home-pass on an average?

One home-pass, if you talked about, it is somewhere around INR 500 to incur for creating 1 home-pass on the financial side. Yes, on home-pass side, you have seen that there is some slowdown in these 9 months with the home-pass. As last year, we did around 1.5 million home-passes -- new home-passes. And this year, as I said, it's a slowdown because of the COVID, and there is not a lot of things which you can do on the ground. But yes, we are going to pick it up. We are hoping that FY '22 is again going to be good for us, where we are going to look forward to go into more deeper into the market, connect rural Gujarat which was in the agenda. And so we are hoping that somewhere home-pass, we are going to be on the same trend as it was in the last year.

Same as FY '20?

FY '22, I'm talking about -- yes, I mean, FY '20.

Okay. And so this EPC contract that we had, do that -- I think the idea earlier was that it gives us advantage in our main business after we laid these cables for our broadband and cable business. So do we see that kind of benefits coming in now that we are closer to the end of project?

Yes. That's the strategic decision which -- or directions, you can say, which we are taking right now. Already, the thing is in the motion for doing that. And we are hopeful that FY '22 is going to prove that strategy. And that's why I've talked about the rural Gujarat.

Okay. And if you could just -- last 2 questions. If you could elaborate a little bit more on the kind of product launches that we are seeing apart from the hybrid box? And secondly, the CapEx plan for Q4 and FY '22, if possible?

So right now on the product, one is hybrid box, as you said, where we are going to bundle our CATV plus broadband plus OTT together. One is the -- second is the distribution, where we are going to do broadband plus OTT, CATV plus OTT together. The third is broadband through partners, the concept which we have launched that in the -- apart from the other markets wherever we have the strong partners and all, we are going to go to the consumer through our partners. Already the infrastructure is lying, just we have to upgrade a bit and start providing the broadband services so that we can spread quickly into all over India and start gaining the consumer base on -- as the demands are high and as you know that broadband has become essential services for everyone. So that's the plan that we are also launching in quarter 4. Plus, we are looking forward for going with marketing activities, advertisement activities around this -- these products and these services. And -- so that's the plan -- overall plan, which we are going to do in the quarter 4.

CapEx.

And CapEx side, if you talk about, we are -- already did around INR 237 crore of CapEx this year, where INR 110 crore has gone into the broadband and the rest, INR 127 crore, has gone into the CATV side. We are -- in the last call, I had said that we are going to do around INR 260 crore to INR 270 crore of the CapEx, which we are going to increase. We are going up to around INR 300 crores of the CapEx. And mostly, it is going to be in the broadband side where we are expanding very fast.

Okay. And any inorganic acquisition plan?

Inorganic...

Under consideration.

Yes, it is under consideration right now. But as you know that when you're going for any inorganic acquisition, you have to do the ground survey and all those activities, you have to do in the ground first to reassure that what you are getting is right. That is still a bit difficult in the COVID side. So those are under consideration. We are looking forward that the situations will become amenable for us to assess those networks and all, and then we will go ahead and do it.

The next question is from the line of Swechha Jain from ANS Wealth.

Sir, I have a couple of questions. One was a follow-up regarding the hybrid box, which the previous participants have asked. So I want to understand now, say if I'm a customer and I decide to go ahead with your hybrid box, now I already have a cable connection from GTPL and a broadband from GTPL. So the hybrid box would replace my need of separate connection of cable TV and Internet from you? Is my understanding correct?

Yes. [Foreign Language] hybrid box [Foreign Language] broadband service [Foreign Language] cable TV service [Foreign Language] plus [Foreign Language] over the OTT service [Foreign Language] accessories, vanilla box [Foreign Language] replace [Foreign Language].

Okay. And sir, OTT [Foreign Language] individual platforms [Foreign Language], so I will have to again separately subscribe for those individual OTT platform [Foreign Language] hybrid box [Foreign Language] suppose [Foreign Language] maximum plan [Foreign Language] individual subscription OTT [Foreign Language] I need that also separately?

[Foreign Language] bundle plan [Foreign Language].

Okay. Okay. Okay. So how competitive our hybrid box can be as compared to what Jio is launching because Jio is our partner directly -- indirectly, right? So I want to understand that with the launch of this hybrid box where do we stand vis-à-vis like a Jio or any other competitor?

So yes, with Jio synergy and all, we are coming with the same price formula.

We are going to complement each other rather than competing each other.

Okay. Okay. Okay. That helps. Sir, my second question was with regard to the broadband business. Now if I look Internet business today is a very small component of our overall revenue. It contributes approximately 10% to 11%. And like you have mentioned in your presentation that overall Internet penetration in India remains very low. So from a strategy perspective, where do we see or what do we envision for Internet business for our company? Like how do you see -- how much would it contribute to the revenue, say, next 3, 4 years?

Rajan-sir, can you take this, please.

So essentially, if you see, Piyush already spoke about it, the kind of opportunities which are there in home-pass expansion. He detailed nicely our home-pass example, okay, and we earlier in many calls discussed about the kind of -- the opportunity Gujarat market offers, okay, with the leading player, BSNL, I mean, they're losing market share and GTPL continuously gaining market share, okay? While I don't have a specific number to talk about it, but I think the management team is pretty confident of maintaining the growth in broadband, which we have seen this year. So you can extrapolate numbers based on the math provided.

Okay. So can I safely assume that the Internet business, which contributes 10% to our revenue, this number -- the contribution will significantly go up over the next 3, 4 years or will it remain -- I understand absolute revenues will grow. But in terms of overall contribution to the revenue, you think the Internet business percentage would go up?

No, no. So we definitely see broadband growing much higher than cable as an industry as well and -- so which should give us a better traction than cable, so which means obviously broadband mix would be easy.

Okay. Okay. And so...

4 years is a very long period. That's the only caveat I want to say. 4 years is a very long period. But currently, whatever market understanding, technology understanding, other understanding we have, that's the trend.

Okay. Okay. And sir, if you're able to share the EBITDA margins separately for the broadband and the CATV?

I think management team has been sharing it. Piyush?

Yes. So if you talked about EBITDA margin in broadband, it is around 40% EBITDA margin, which we are making in the broadband. And in the CATV, it is around 22%, 23%. Together, we are at around 26%, 27% in this.

CATV is 23%, sir?

24%, 24.5%.

Okay. Okay. Okay. So blended, 23% is what we do. Okay.

Blended, we are doing at around 26%, 27%, if you take out the EPC Project.

Okay. Okay. And sir, for the cable TV, what kind of run rate can we expect for next few quarters in terms of the revenue?

So I'll just give you for next 3 years what is the goal for the GTPL rather than few quarters. We are going to grow at around -- the subscriber base, we are looking forward that we are going to grow 50% more in the next 3 years in the cable business and somewhere cross 12 million subscriber base index. And in the broadband business, the growth rate is going to be higher. We are looking forward between 100% to 120% growth rate in the next 3 years' time in the subscriber base in the broadband.

Okay. Okay. Okay. And sir, I'll just ask 1 last question, a few data points, and then I'll just join the queue again. Sir, if you could share the ARPU for the Cable TV business? And if you could share the cash and receivable provision as on December '20, sir?

What is the second question, sorry?

The cash and receivables as on 31st December?

Yes. So the ARPU in the Cable business sits at around INR 123 right now, the average ARPU which is coming.

The receivable actually stand at consolidated level is at INR 3,372 million, and the cash and the cash equivalent is standing at INR 523 million.

INR 523 million, right? Sir, can you give a breakup of the receivables, segment wise?

Yes. So the majorly, the increase is appearing in the broadcasters. So carriage and...

Placement.

Placement and carriage receivables are INR 1,376 million. The EPC Project receivables are at...

Around 150 crores.

INR 1,473 crores -- million. Subscription for Cable TV is very negligible. The ISP service providers -- rest are very negligible. Rest all are very negligible.

Okay. So sir, basically, it's the placement and carriage?

Yes, placement and carriage and EPC Project. These 2 are like 50%, 50%.

Okay. And the placement and carriage, basically, we had to receive it from our LCOs, right, from our partners?

No, it is -- we have to receive it from our broadcasters.

Broadcasters.

Broadcasters. Okay. Okay. Okay.

The next question is from the line of [ Kshitij Goel ], individual investor.

I have 2 questions. One is about aging of the trade receivables. As on 31st of December, how many -- what part of your trade receivables is over 9 months old? Also, you said that we have been writing back some of the impairments that we took at the end of last financial year. Do we expect any new impairments at the end of this financial year?

So for the trade receivables, we are having the global provisioning policy. And basis that, actually, we are providing the provisions. So as far as aging of more than 1 year, it is always subject to provisions, and we are providing based on the metrics approved by the Board. And in Q4, we are not anticipating any fresh provision on our receivable as a doubtful debt.

The next question is from the line of Gautami Desai from Chanakya Capital Services Private Limited.

My question is for Rajan. Rajan, GTPL now says that they have plans of growing across India and doing broadband through their partners. So I believe that there would be places and they would come across places where even a Hathway is present there and even a GTPL partner is present there. So what is the kind of agreement that you are looking at with them?

No. I think Anu bhai already answered that, so -- and it remain the same that we have been working all closely without affecting each other and the same thing will continue. So I think it's -- it has been proven now for quite some time. I mean we earlier used to get this question, but I think now everybody is very clear about that.

No. Why I'm more curious is that I've just come back from my hometown which is in Gujarat and there, GTPL was already present there in broadband and Den has recently started. And I believe Den and Hathway both has the same promoter. So was I missing out on...

I think, Gautami-ji, just -- you are talking about broadband or you are talking about CATV?

Broadband, sir, yes.

So it was some old network [Foreign Language] Den [Foreign Language] acquired [Foreign Language] service [Foreign Language] established [Foreign Language].

The next question is a follow-up question from the line of Pratiksha Daftari from Aequitas Investment Consultancy.

Sir, my question is about the ARPU for both our businesses. So we had -- we were -- our sharing agreement -- our arrangement with the LCOs are such that we had plans to reduce their share steadily. So what is the current revenue sharing that we have with our LCOs? And where do we see our ARPU going ahead like if we were to reduce their share? And secondly, the ARPU of INR 445, is this sustainable? Are we going to see growth? Or are we going to be able to sustain this ARPU going ahead in broadband business?

Pratiksha, in cable side, we have not changed anything on the pricing or packaging side right now. As these 9 months has troubled some of our -- everyone, for consumer also, consumer spending had gone down and everything happened. So we have not changed anything and anything with LCOs also. So still, we are the lowest in the industry, as I said, that is at 70-30, which is there with the operations, and we are still continuing on that way. Going forward, we will see at the appropriate time that we will change this ratios and all. But yes, we will wait for either NTO 2 to come or either we will take this call once the situation we think that it is improving and more consumer spending is happening and all. Second, on the broadband side, as we have seen, we have not changed any pricing and all. This -- the ARPU increase is happening because of the packages changed from lower to higher. People are moving to the FTTX packages, which is 100 MBPS and 50 MBPS from somewhere 30 MBPS to MBPS 40 MBPS. And that -- because of that movement, we have seen that 7% growth has been taken in the ARPU. We are making 40% margin in this business right now. So we are looking forward that more ARPU change will happen -- growth will happen because of shifting of the consumer from lower packages -- lower speed packages to the higher speed packages.

Sir, this kind of growth is something that you foresee will be possible going ahead?

Yes, we are seeing it's possible because consumers are -- whenever they are coming for the renewals, they are going for the higher packages -- higher speed packages, you can say. And there, you are seeing that the growth in ARPU is happening.

And also with the launch of our hybrid box, so do we see any sort of sales cannibalization happening in our key markets right now where we might lose out on the old -- just the new subscribers in the hybrid box maybe at the cost of our existing services?

No, it is not going to be -- you can say that cannibalizing on the existing. Existing can convert into this where they are going to have a bundled product where they are going to contribute more to us. That's the way we are going to work. It is not like our market is going to get cannibalized because of this.

The next question is from the line of Dixit Doshi from Whitestone Financial Advisors.

Most of the questions have been answered. Just 1 last question. Regarding -- any update regarding the AGR contingent liability?

On AGR side, still, as you see that some cases are going on into -- in the TDSAT and the Supreme Court. And we are monitoring it closely. As per Companies Act, we are legally very strong that AGR should not come to us. And we have taken -- we have given the note on that regard -- updated note on that regard in our financials also.

The next question is from the line of Swechha Jain from ANS Wealth.

Just a couple of follow-up questions. Sir, with respect to the broadband ARPU, you said you do see some more growth in the ARPU, right? So where do you think ARPU can settle down in the next 2, 3, 4 quarters? Do you see that INR 445 per month is the ARPU that will be on steady-state basis going ahead?

Right now, if you see, we were at -- first quarter, we were at around INR 420. Last 2 quarters, we have increased as people have started changing their packages, we have come to INR 445. We are looking forward that in the quarter 4 also, by end of March, this trend will go on as the customers are coming for renewables and they are going for higher packages. So we are looking forward to that. Again, it is going to be increase of INR 10 to INR 15 this quarter also.

Okay. So, sir, where do you see this settling down? Like, I mean, do you think people moving to higher speed packages is a sustainable thing? And most of your subscribers would move to a higher package in 3 months or 6 months? Just want to understand some sense that you can give that maximum what level can this ARPU reach?

So it's like 100 MBPS plan which we are giving at INR 650 and 60 MBPS plan which we are giving at INR 525 and 40 MBPS plan we are giving at INR 425. So as the consumers are and below that is around INR 375 and INR 350, the lower packages and as we are seeing that people are moving towards 60 MBPS and 100 MBPS, and that's why we have seen this movements which is happening. So somewhere we are looking forward that around INR 475 to INR 500 is going to be the movement of -- where it is going to get stabilized on these price points.

Okay. Okay. Okay, sir, that helps. Another question was, if we look at our Q3 numbers, our, I think, activation revenue has marginally dropped. So can you just throw some light as to just a one-off kind of a thing or do we see this trend going ahead?

You're talking about console or you're talking about stand-alone?

Consolidated basis. It's just a marginal drop, but just from a trend perspective I just wanted to know.

No. From the trend perspective, if you see that -- yes -- from -- you're talking about from last year, yes, it had dropped from INR 274 million to...

Yes, yes, Y-o-Y basis, right.

Yes, Y-o-Y because last year the COVID was not there, so we were pushing more boxes on the ground. And this year, if you see, we are pushing -- in the last quarter also we have just fitted 200,000 boxes. And this quarter also, we are fitting at around 200,000 boxes. So it depends on how much saving is happening on the ground and based on that your activation revenue goes up. So as the situation will be more amenable for us we are going to see more, and then you will see that activation revenue is going down. So if you see on the -- so it depends on how much boxes you are putting on the ground. The ground seating has been slowed down a bit because of the COVID situation and all. So we are looking forward that once the situation will be amenable, we are again going to be on the same level as FY '20.

Okay, okay. And sir, even with respect to the employee cost, we do see a trend that employee cost has reduced on a Y-o-Y basis at a consolidated level. So going ahead, sir, where do you see the employee cost?

Employee cost is going to be at the same level such as there some increase because of the increments and new employees and all, which is at the quarter 3. The decrease which you have seen is because we have outsourced some of the ground functions based on the performance based and that way to increase our performance and increase our output on that basis. So we have outsourced some of the ground activities like on the technical side, on the [indiscernible] side and all which we have outsourced. So that's why you are seeing the drop from INR 36 crores to around INR 28 crores this quarter. Last quarter, it was INR 26 crores. So that's why -- but it is going to be at the same level of quarter 3 going forward.

The next question is from the line of Brijesh Ved from BNP Paribas Asset Management.

Congratulations, sir, for a good set of numbers. I just wanted a clarification on the CapEx number that you mentioned for FY '22. Did you say it would be around INR 350 crores? Would that be the total CapEx or this is for the broadband?

No, it's -- Brijesh, till date, we have made around INR 237 crore of total CapEx. Out of that, the broadband, it has gone INR 116 crore and in the CATV it is INR 121 crore. If you remember in the last call, we have changed our CapEx from INR 210 crores to somewhere between INR 260 crores to INR 270 crores. We are, again, saying that we are going to do around INR 300 crores to INR 310 crores of the total CapEx, out of which, in the quarter 4, the increase, which is from INR 237 crores to INR 300 crores to INR 310 crores mainly around 65% is going to be in the broadband side, CATV is just going to be 30% to 35%.

Right. Now on the broadband side, where is this incremental CapEx actually going? Because we have a lot of home-passes to be covered in terms of the conversions, et cetera. So where exactly is this CapEx going?

Yes. It is going to on connecting the customers for the connected customers, where we are providing the last mile equipments, means the routers and we are doing the last mile connectivity to that. There, if you remember, Brijesh, when I have given that there are around INR 4,000 to INR 4,500 is the CapEx, out of that, when you are doing the last mile connectivity for the connected customers, around INR 2,000 debt at that point of time -- INR 2,000 to INR 2,200 of CapEx. So we were providing the FTTX overview at that time, plus we were doing the -- which we call it FAT, which is putting the fiber at the customer house. So that way, it is around INR 2,000 to INR 2,200 CapEx you spend at that time. Rest is making the home-pass, which is around INR 2,000.

So would that -- just so that my understanding is clear, would that mean that the activation number would go up substantially in Q4 because that's when you'll need to kind of incur the CP expense, right?

We are doing 2 activities, Brijesh, on this. As you know that as your consumption of data is increasing, so you have to increase the equipments in the back-end also to meet that. Already, we are crossing around 0.6 million of subscriber base. And if you have to build it for the future, then you have to do all activities in the back-end also on this quarter so that we can meet as by end of FY '21, we are going to the crossing 650,000, so you have to do all those expenses in the IT side, in the NOC side. So out of this, if I talk about, this is for the customer acquisitions, plus it is for the enhancement of our market.

Sure, sure.

Both are integrated.

Sure. And what kind of CapEx are we looking at for financial year 2021, '22?

Right now, we are keeping it at the same level that we are going to go for INR 300 crores. And there, it is also going to be around -- INR 160 crores to INR 170 crores is going to be in the broadband side and rest INR 130 crores to INR 140 crores is going to be in the CATV side.

Sure. My other question was with regards to the hybrid boxes and the solutions around that. Now what we've seen is with a lot of service providers like Jio, they have a bundled plan where a lot of these deals have been done with the OTT players. Are -- have we also done any such deals or are we looking -- do we need to do such deals so that there's an integrated play available from a customer's standpoint?

Yes. We are doing the deals. Already, I have explained earlier also that already some deal has been closed, some deal is on the verge of closing. And these apps are going to be embed in the boxes. So all the main apps is going to be embed in the boxes. And this hybrid box is going to convert your non-smart TV into smart TV.

Sure. Sure. And sir, 1 more question. In terms of geographical area, we had a kind of -- we've basically scaled up pretty much in Gujarat and then West Bengal and then we entered couple of other markets. How are we looking at this at a broader level now in terms of -- our approach has been quite clustered and we've basically scaled up quite a bit wherever we've gone and we've kind of established market leadership. So how are we looking at this because we also have some presence in Maharashtra now and some other regions in the southern states. So how are we looking at this now?

Right now, we are at 13 states. And if we talked about our strategy, as I said earlier also, that cable business is a density business. So whichever city or area we are going, you have to be #1, #2 to make money in that market and dominate that market. That's what we did in Gujarat. That's what we are doing in West Bengal. Now we are doing it in Maharashtra. Already we have around 1.3 million, 1.4 million subscriber base over there, and we are one of the major leaders in Maharashtra. Same we are doing in AP and Telangana, where we are crossing 1 million now and going to be a major leader over there. Same way, we are progressing in Northeast. Already, we have entered into Tripura and Mizoram now, the new state which I will announce later. Mizoram, we have entered. We are looking forward for Nagaland. And Meghalaya, already we are starting now. So it's more of like out of 7 states we are going to be in the 5 states in the Northeast and expanding very fast, becoming leaders on those markets. Bihar and Jharkhand, if we talk about city specific, either Patna or Dhanbad, we are already leader over there. And so that way, we -- GTPL works on that way that you have to be #1, #2 player on those market. And we are looking forward for the other opportunities in other states. And at the right time we were going to take those decisions. This year is, as you know, it's a bit wash out for that being the COVID that you can't expand very fast. But still, we have started connecting on the Northeast side mainly and started expanding in Tamil Nadu, which was -- we entered in somewhere December of 2020 and -- December 2019, and we are not able to expand there because of COVID. Now we are expanding. So on that strategy, we are going ahead. Somewhere, as I said that in the 3 years' time, we wanted to do a 50% jump in our subscriber base. And we are working towards that. Already, we have the strategy in place. Yes, if the situation and market situation, you can say that the COVID situation and this all will allow us to implement those, we are going to implement it very aggressively.

The next question is from the line of [ Kshitij Goel ] from -- individual investor.

My question is about hybrid box implementation. In your existing markets, what proportion of your existing customers can migrate to a hybrid box once they are offered this facility? What is the expected ARPU that you expect at this stage from these hybrid boxes?

[ Kshitij ], hybrid box plans and all, it is -- we have already in place. Strategically, we have -- the data which you are asking is already there. But I will say that let it be right now. As we are going to be ready for launch, as I said, we are going to do the marketing activities and all, I think at that point of time, if we interact and give you the figures and all, that will be, I think, better, rather than disclosing all the figures right now. So that's a request.

And what about a migration point of view, like can the broadband and cable TV subscribers straightaway migrate to a hybrid box from a technology point of view at this point?

Technology point of view, they can migrate very easily. Yes, we have to see that consumer wants to migrate straight away or they want to wait and go for that. Those -- all those things are there. Already, we have our dual customers data and we are servicing them in a special way. Already those are the potential customers for the hybrid. And already, we are contacting them, taking all the -- you can say the market survey and all is happening on those on our own customers through our call centers and through our ground team. We already gathered the potential customers for a hybrid and all. And we are waiting for that. Once we will come up with the -- at the time of launch, we will come up with the plans and all and then we aggressively approach those customers and do it.

Right. So if there's good demand for these hybrid boxes, how scalable is this as in from a supplying the box point of view to your customers?

See the survey which is going on is for the interest of the customer, the price point and what period they want to subscribe and all those things, those surveys are going on. So I will say wait for some time. As we come closer to the launch, we'll give those numbers.

The next question is from the line of Swechha Jain from ANS Wealth.

Sir, I just wanted to reconfirm the receivable number. So you said it is INR 3,372 million, right?

Yes, it's 337 -- INR 3,372 million. That's right.

Okay. Sir, then out of this, you said INR 1,036 million for placement and INR 1,473 million is for EPC, right?

That's right. So it's like carriage is INR 1,551 million.

Okay, INR 1,551 million.

And EPC is INR 1,473 million.

Okay. Okay. Okay. I think I got the carriage number wrong. Sir, and just 1 last question. I don't know if it is possible. Can we have the blended ARPU number for us? The reason I'm asking this is because going back to my previous question on the hybrid box. So if I am a cable TV subscriber and I'm also a broadband subscriber, so if I migrate to hybrid, I would not need these 2 connections separately, right? So from a company perspective, if my Internet ARPU is close to, say, INR 445 and cable TV ARPU currently is at INR 123, so from a company perspective, I wanted to understand that hybrid moving like -- migrating customers to hybrid would be beneficial if my ARPU would be higher than the blended ARPU of both these businesses, right?

See, we are going to give some benefits to the consumer, but that's why I would say that the survey is happening for the period, like of what period we have to give, 3 months, 6 months, 12 months to be there. So based on that, if you see. And second is the stickiness of the customer. So you'll have to see that the customer who is going to come into the hybrid boxes and all, they are going to be very sticky. So all those benefits we have to see. And based on that, we have to do it. But yes, I'll just say that this business is going to be -- hybrid boxes business is going to be accretive to our EBITDA rather than decretive. So we are going to do the margins and all in such a way.

Okay. And by when do we see this rolling out, sir, in the market, like Q4 or do you think next year, like Q1, Q2 of next year?

No, we are planning to do it in the Q4. Some boxes have come, some boxes have got delayed because of -- in the middle, as I say, that suddenly mid of November till the mid of December the COVID was very high in India. [Technical Difficulty] come back. So that's why it's got delayed, the boxes, but we are waiting for that. So we are looking forward that -- or you can say the management is gearing to launch it in the quarter 4. We are ready with all those things. We just have to...

The next question is from the line of Vivekanand from AMBIT Capital.

Sir, I'll ask the closing question. On the cable TV side, sir, I would just like to understand your vision for this business, say, 3 years, 5 years down the line, we see that one family-run business, right, both cable MSO and DTH, the family's shareholding is sharply declining, right, because of the excessive debt. So when we enter into new states like Andhra Pradesh and Telangana, Maharashtra, is it that we are capitalizing on the MSO -- that MSO which was earlier providing service to the LCOs in these areas and now those LCOs are shifting to us? Or are we largely gaining at the cost of the DTH entities? And as a related question, I just wanted to understand how do you think about the market as far as the number of players in the cable MSO business 3 years hence, because you are expanding here rapidly?

Yes. So I will give the answer in such a way that, as I said earlier also that there is a push strategy and there is a pull strategy. Till date, all MSOs and all, we were doing the push strategy that we are giving the schemes, we are giving the all those benefits to the LCOs, our partners, and asking them to bring the customer back from the DTH, from the ground, everywhere. The second is the pull strategy where you can go directly to the consumer and through the advertisements, through the TVCs, through the hoardings, through the radio, everywhere, and you start doing those schemes for the consumer directly where you can start getting the lead from the consumer side and whom you want to convert from DTH to the cable business side. So this is on the two-pronged strategy. We are working on the -- both the strategies, as I said that we have started the Chhatri Hataao GTPL Lagao campaign just before the COVID. And in COVID time when it came down, we have again started it in the month of August, and the response was very good, but we had to stop it by October because again, the COVID has gone up. So we had to stop that because of the ground activities. But this two-pronged strategy we are going to see everywhere, wherever we are going in the market. As we launched this Festival Dhamaka, as I said that we are expanding right now in the market. So we already launched that in the Northeast this Chhatri Hataao GTPL Lagao. The responses are very good. And slowly, we are going to launch this in all over India level as the situation improves. So this two-pronged strategy we have to go, as I say, that there are 60 million cable households -- cable -- independent cable subscriber base whom we are going to -- we have to target, plus there are 60 million DTH base for the whole industry, which we have to target. So there are 120 million base which has to be targeted by the organized player as organized player has just 35 million to 40 million subscriber base in their kitty for this. So there is a lot of opportunity there at 60 million independent cable, 60 million DTH, plus there are 130 million non-TV households in India also. So the opportunities are huge in the CATV side. And as I said, in the broadband side also, the opportunities are very huge as only 20 million households have wired broadband right now. Around 280 million don't have any wired broadband. So opportunities are very high on that side. Somewhere you have to start combining both the business together to attract and to have more sticky customers and to put the pinch of OTT also on that. And that's the strategy on which you have to go to bring more and more sticky customers and where the customer will be also happy to get all the services all together. And then you have to start layering the services on those. More services on those and make those customers more sticky and make them more happy. So that's the strategy on which we have to work, and that is the way which we are making our strategies, keeping all these things in perspective.

Sure. No, this was very helpful. The other one that I had was with respect to your -- the conversion rate of the homes passed to the same broadband subscribers, we are seeing that steadily go up over the last few quarters. So is it because some of the markets where we had broadband reach before -- let's say, before FY 2019, where we already had broadband reach, there we saw demand from the ground because of the COVID or are we becoming a lot more efficient in identifying micro markets where we should increase homes passed and, therefore, large proportion of the new homes passed, we are getting much better conversion there?

So I will take a part of question, then I will -- I request Rajan sir to take the other part. The first, if you talked about the home-pass creation, as I said that this year is a bit of wash out for GTPL as we did very home passes last year but because of COVID we are not able to add those home passes here. So it's more of extraction from the current home passes. And we have got those benefits because of -- you're right. Both are correct. I will say that both situations are there. We are becoming more and more efficient, plus there is that high demand because of the COVID and all, and we are going to reap those benefits because we are ready with the new home passes which we do for the last 2 years to 3 years' time. So that's the way GTPL has got benefited. Rajan, sir, if you add more on this. I think Vivek -- so this is the reason, Vivek, I will say. And we are looking forward that we are going to be more and more efficient. And as the, you can say, the sales side, the per FOS sales is increasing which we have seen and same on the installation side that per installer group the number of installation is increasing. Those are the efficient side which we are seeing that we are progressing. Yes, COVID and because of all those situations, demands are high, and we are meeting them efficiently right now.

Right. Sir, this was very helpful, and I wish you all the best. I think there are no more questions in the queue. So do you want to make any closing comments?

Yes. Thanks, everyone, for joining the earning call. We look forward for good quarter 4. And again, we will meet after the quarter 4 and annual results. Be safe and healthy. Thanks a lot.

Ladies and gentlemen, on behalf of AMBIT Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your line.