GTPL Hathway Limited (GTPL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q2 and H1 FY '22 Results Conference Call of GTPL Hathway, hosted by Emkay Global Financial Services. We have with us today 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. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Naval Seth from Emkay Global Financial Services. Thank you, and over to you.

Thank you. Good evening, everyone. I would like to welcome the management and thank them for this opportunity. I shall now hand over the call to the management for their opening remarks. Over to you, sir.

Thank you, Navalji. Good evening, everyone. A warm welcome to all of you to the conference call of GTPL Hathway Limited to discuss the financial and operational performance of quarter 2 and H1 2022. We continue to deliver on key KPIs during H1 FY 2022. The highlights of H1 FY 2022 was robust subscriber addition and subscription revenue for our Broadband business. The company added 1 lakh nonbroadband subscribers in H1 FY 2022. Taking the total broadband subscribers to 7 lakh 35,000 during H1 FY 2022. The GTPL's active CATV subscriber base grew by 3% Y-o-Y basis. The company's balance sheet remain strong as we are a net debt-free company with an impressive ROC and ROE of 33% and 20%, respectively on an annualized basis. With the economy getting back to normalcy led by aggressive vaccination drive, GTPL is geared to strengthened its presence in the existing and new market. With that, I hand over to Piyush Pankaj, who can take you through the business and financial aspect of the company. Piyush?

Thank you, Mr. Jadeja. Good evening, everyone. As you are aware, GTPL Hathway is one of the few consistently profit-making cable TV and broadband company in India. In the last 5 years, our CATV paying subscriber base has grown sharply by 2x to 7.35 million. Our broadband subscriber base has grown by 3.6x to around 0.7 million. We are #1 private wireline broadband player in Gujarat. We have been consistently generating free cash flow and achieved net debt free status in FY '21. GTPL has consistently rewarded its shareholders with regular dividends. Additionally, I'm happy to share with you that GTPL Hathaway Limited has been accredited with the prestigious ISO Certification for both CATV and Broadband business. We have appointed Deloitte as our statutory auditors for GTPL Broadband, 100% subsidiary of listed entity. Let me now share the performance highlights for H1 FY '22. In the CATV segment, our active subscribers stood at 8.05 million as on September 30, 2021. GTPL's digital CATV services reached 1,000-plus counts spread across 15 states in India. The company is expanding aggressively in Maharashtra, Andhra Pradesh, Telangana, Tamil Nadu and the North States. Of the 300-million plus households in India, only 210 million households that is translating to 70% penetration are connected with TV services. The CATV industry offers an underlying growth opportunity for an organized and seasoned player like GTPL Hathaway. Our CATV business expansion may 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 mega 6% penetration of the total households in India. Additionally, the profile of high-speed unlimited data package offers an opportunity to connect homes with wireline broadband services. In the Broadband segment, we added 3 lakh 30,000 new home pass in H1 FY '22 and taking the total home pass, as on September 30, 2021 to 4.02 million. During the quarter, GTPL added 45,000 net broadband subscribers, taking the total net broadband subscribers, as on September 30, 2021 to 7 lakh 35,000. The broadband ARPU for H1 FY '22 grew by 2% Y-o-Y to INR 440 per month. GTPL looks forward to expanding its Broadband business by leveraging its existing base of 10-plus million CATV subscribers and attracting new broadband subscribers through business partners. Let us now go to our financial performance. On our consolidated business, excluding EPC contract, during quarter 2 FY '22, GTPL's consolidated revenue grown by 18% Y-o-Y to INR 5,992 million. The CATV subscription revenue stood at INR 2,715 million. The broadband revenue for the quarter surged by 50% Y-o-Y to INR 1,006 million, led by healthy growth in subscriber base. On our consolidated business, including EPC contract during quarter 2 FY '22, GTPL's consolidated revenue grew by 4% Y-o-Y to INR 6,052 million. EBITDA for the quarter increased by 4% Y-o-Y to INR 1,448 million, with a margin of 23.9%. PAT for the quarter stood at INR 433 million. Our EPC contract, during quarter 2 FY '22 reported the revenue, EBITDA and profit before tax of INR 61 million, INR 4 million and INR 4 million, respectively. On our stand-alone business, excluding EPC contract, during quarter 2 FY '22, the company's revenue grew by 14% Y-o-Y to INR 3,740 million. The company reported EBITDA of INR 778 million with an EBITDA margin of 20.8%. On our stand-alone business, excluding EPC contract during quarter 2 FY '22, the company's revenue grew by 11% Y-o-Y to INR 3,757 million. The company reported EBITDA of INR 794 million with an EBITDA margin of 21.1%. On our stand-alone business, including EPC contract during quarter 2 FY '22, the company's revenue stood at INR 3,818 million. EBITDA during the quarter stood at INR 798 million with an EBITDA margin of 20.9%. PAT during the quarter stood at INR 332 million. This is all from my side. Thank you, everyone, for your attention. We can now begin with the questions and answer session.

[Operator Instructions] The first question is from the line of [ Riya Mehta ] from Aequitas Investment.

This is Pratiksha here. My first question actually is for Cable TV division. I think if you look at, broadly, last 2 years, our pay -- digital paying subscribers have remained pretty much around 7.25 million, 7.5 million subscribers. So how do we look at growth in this segment? And what is the breakup of, like, the incremental subscribers this time? How much of it would be commercial? And how much of it would be retail?

Thanks, Pratiksha. Last 1.5 years, if I talk about, because of -- as you know, the -- because of COVID-19 as the ground situation, it was not very healthy for all the operators, for the whole industry. And as commercial subscribers were going -- opting out of the cable, for their services, they are coming back, going out. That's -- continuously, that is happening. And that's why we are adding in the home segment. But because of the commercial, you will see that the numbers are still flat last 1.5 years. You can see from March '20 to -- till date, the numbers are almost flat on that basis. We are hoping that as the situation has improved now, next 2 quarters are going to be good for FY '22 and we look forward that the projections which we are going, that we are going to go as we were growing before the pandemic. We are going to attain that situation again. This time, we have added around, net subscribers, 50,000. Most subscriber base has come into the fold. That is mainly after August 15 when the market has started opening up, and this is all last 40 days that we got around 50,000 subscriber base back. Some corporate subscribers are coming back, the premise which we are seeing it and we are hopeful that as we -- the stable season is going on and the hotels are opening, the -- all the shops are waiting to open. People are flocking, traveling, everything is happening. And we are seeing that corporate subscribers are coming back -- into the fold back.

So I think, sir, on next milestone that we had set for ourselves was about 8 million subscribers. How much time do we think, given that -- like, what is our internal time line that we might be able to achieve that?

We are looking forward that, that will be achieved by second quarter of next year right now FY '23. As we lost [ paid ] cost H in that, we wanted to do that through March '22, but we lost first 6 months. And we had just grown 50,000 on that. So we are looking forward that in the next 1 year time, we are going to cross 8 million.

Okay. And sir, my next question's on Broadband front. So how many home passes do we target to add this year? And, like, what is our, throughout, milestone that we set out for ourselves here on home pass front?

This H1, we have made around 330,000 new home passes and we are hopeful that we are going to continue as we were doing a year before the pandemic and Anir, sir, do you want to highlight this?

So we have mentioned in the earlier call as well, last 2 years, because of the fiber project GTPL has taken, there's a huge amount of fiber which has been rolled all across Gujarat, okay, while currently it's being used for the BharatNet project, but the fiber is available and we have adjusted to that, which just actually means we have, pretty much, access to every [ public level ] down Gujarat, okay? And of course, last 6 months, as it was rightly mentioned, home pass was limited because of ground situation because of pandemic. Now with pandemic being over and ground access as well as fiber being available, okay? And GTPL is still able to, at a very, kind of, economical product, around INR 440 ARPU, able to deliver 40% plus of the entire broadband. So it makes a lot of sense for us to take this offering even to lower level towns and obviously, within metros as well as people are spending. So all efforts are happening to expand, even home pass, aggressively as we are able to get the terms also.

Okay. And sir, if you could just give the breakup of receivable segment, right? Like, how much of our current receivables would be for -- from broadcasters and how much for EPC?

Total receivables is INR 3,226. On that, current is around INR 167 crores for INR 322 crores and EPC project is around INR 99 crores, and rest are others, which is around INR 42 -- INR 45, INR 46 crores. The total is INR 322 crores.

Okay, and the last question is if you could give the CapEx for -- sorry, you were saying something?

Yes. Actually, go ahead. Please, Pratiksha.

No, CapEx for this quarter, segment-wise CapEx for this quarter and the guidance, if you want to change the full year guidance for CapEx.

Yes. So CapEx, which we did in H1 is -- total is INR 152 crores, we did. As I have given that in quarter 1, we did around INR 82 crores. This quarter, we did around INR 80 crores. Out of INR 80 crores, around INR 35 crores is in the CATV, and the rest, around INR 45 crores is in broadband.

And sir, full year target would be?

Full year target, we are still maintaining that it is going to be somewhere close to INR 400 crores.

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

Most of my questions are answered. Just -- can you just repeat the receivable number? I listened, okay, rates was INR 167 crores and EPC is around INR 100 crores. Is that correct?

Yes, that's right. EPCs INR 98 crores and yes, Carriage is INR 167 crores. Carriage and placement and marketing.

So what comprise of the others segment?

Others is -- O&M is there, plus others vendors are there. Others are, like, advertisements, small advertisements are there and all comprises of others revenues.

Okay. Nothing from MSO, right? It's 100% prepaid, right?

Yes, that's...

Yes, it's 100% prepaid.

Okay. And in EPC project, how much more revenue we need -- is going to come? Or it's complete and now only O&M will come?

So yes, the EPC project is almost completed. So I don't think the EPC project -- but yes, O&M will continue as it is.

And O&M will be, yearly, how much?

Yearly, O&M is yearly close to around INR 57 crores.

INR 57 crore yearly. Okay, and can you just elaborate slightly on our new set top box which we were planning to launch?

You're talking about hybrid box?

Yes, yes, yes.

Yes, hybrid box is already -- we did the soft launch and around 1,500 boxes are in the market where the -- all types of samplings are happening, on the packages also, on the technical side also, everything. We are planning to do the hard launch somewhere by October end or November start. So that's the plan right now. Current plan is this. We already did the soft launch.

[Foreign Language] we're going to [ launch then ].

Sorry? Sorry?

[Foreign Language]

Means around Diwali.

Okay. And just last question from my side. Pre-COVID, we used to mention that once everything will be settled, we might look at increasing our share from the MSO. So is there any thought process over there? Or we are still maintaining, like, INR 120 ARPU.

No.

That thought process is there, yes. 100%.

So we'll be looking to increase? Or maybe it's still a bit far?

No, we are looking to increase, but we are waiting for this quarter, most probably by quarter 4, the price in this will happen.

Okay. And let's say, over next 2, 3 years, anywhere we can take our share to a respectable level, which the competitors do, till what level it can go up from INR 120, starting short term, but let's say over 2, 3 years?

INR 160, INR 170.

Yes. It will be somewhere around, jump by around 25%.

Okay, 25%. Okay.

The next question is from the line of Harsh Jhanwar from Centrum PMS.

Sir, so you recent -- an earlier participant asked about BharatNet project. You said that you still have access to it. Sir, if you could briefly talk a bit more about such project, what kind of advantage these projects give you? And are there any such projects more in pipeline where you're building -- looking to build?

So about BharatNet, basically, majorly, this project is -- it's called GFGNL and then 100% ownership with the BNL Network [Foreign Language] Phase 1 and Phase 2 all put together, close to around 8,000 gram panchayat, which already connected and close to around 3 -- 34,000 kilometer fiber is already laid. So [Foreign Language] cable TV side or broadband side, monetization's going to benefit GTPL [Foreign Language]. Or as we're talking about other project, it's under pipeline. A lot of projects are there, but it's -- we are -- ability, and they were -- time will come, we'll let you know.

And sir, in these other projects which are in pipeline and where we're looking to bet, so who can be our competitor there, main competitor?

You can say a lot of ITI, LNT and all -- Tatas and all different players, different states.

Okay. So sir, as I understand, these projects are very important for our penetration into a state and establishing our position.

Yes.

What kind of margins do we target when we look at such projects? Or margins are not very important and getting that position is...

We -- in GFGNL, as we have given in our financials also, the margin was 14% there, which 7% was coming in and 7% we are giving to our partner. So that -- those are the margins on which we have to create our number.

The next question is from then line of Shivam Saxena from ICICI Bank.

I want to understand what would be the group trajectory going forward. Are you seeing any upgrades on the existing resource [ bank ] or any further -- what is the guidance for the ARPU next year or coming quarters?

For what, cable TV? Or broadband?

Broadband -- both -- or you can specify both, that's really helpful.

Rajan, go head, could you...

Broadband ARPUs are broadly stable. Frankly, there is a design, okay? So we have been maintaining that this whole equation is working very fine for us. Like many of you speak about competition, which is where we have been saying this whole ARPU of between INR 400 to INR 500 and average around INR 450, okay, that's essentially the ARPU we have decided for ourselves for the near future, okay? Because, even with this kind of ARPU, you'll have seen the EBITDA margins, they're quite good, more than 40%. So currently we're into that whole space of acquiring more and more consumers, will be put into our home pass penetration. So considering that ARPU, so Broadband will remain broadly stable, okay? Of course, we have the future with us, in terms of upgrading the system. We must do higher speed packages, et cetera, okay? Once they are there with us and once their needs have also evolved over a period of time. But from next couple of quarters' perspective, the broadband ARPUs will remain fairly stable. Anu Bhai, over to you, for cable, please.

Cable is also same as Rajan has -- as linear TV. Cable, as we said earlier, that we are looking forward to increase our margins. And we will do that in -- somewhere in quarter 4.

And any update on the new tariff order.

New tariff order, yes. It's already done regulations [Foreign Language]. But still we are meeting with a lot of other broadcasters, [ price ] [Foreign Language].

But has it been implemented?

[Foreign Language]

[Foreign Language] January.

Okay. So it is okay from the court, right? So it is now no more subsidized, right?

No matter if subsidized [Foreign Language]. So technically, yes [Foreign Language]. What matters to you is subsidized.

So as per my understanding, thus fee would reduce -- the channel fee would reduce so it will impact your margins also. So your share will also go down?

We have to wait and see.

[Foreign Language] fees is not reduced or anything. Still we have to wait because of [Foreign Language]. You will have to wait [Foreign Language].

But sir, if you just -- your view on the downward side only now as per the NTO 2.0-wise.

[Foreign Language]

[Operator Instructions] The next question is from the line of Anil from Centrum Wealth.

First of all, congratulations on a great set of numbers. I had a few questions. On a broader basis, how does cable TV get impacted due to OTT? Could it be that the slowdown that we are seeing is due to the onslaught of OTT? If you can sort of throw some light that is it only due to the closure of hospitals -- sorry, hotels and commercial establishments due to COVID, which is causing or it could be due to OTT. That is part 1 of my question. I have a part 2, which is now there is this Airtel is also coming out with a satellite broadband program. And Elon Musk, I mean that, whatever, Starlink is also coming. And apart from that, Geo is there, and a lot of other people are entering wireline broadband aggressively. So how does GTPL stand in comparison with all these different kinds of competitors? These are big people with a lot of strong balance sheets. So what has been your experience? And what is your outlook? One question is on CAT cable. Other question is on wireline broadband.

Yes. So OTT impact on cable side. Yes, you can see metros and all, you can see 2% to 3% impact is happening on that 100%. Mainly, it is because of the ground and all, what we have seen till date that due to pandemic and all, corporate subscribers are not there. But yes, OTT is there, which is going to be on the higher segment side. But yes, we are countering it with our hybrid boxes and bringing the OTT platforms to our platforms also. So all those efforts are going on to counter that. Till date, we have not seen any major impact because of OTT and others. Rajan, sir, you can highlight on the CATV side also and wireline satellite side, sir.

Yes, Piyush. So I'll take it [ south ] from here. So let's divide the question into 2 parts. First is OTT; second, broadband, okay. OTT is very easy to understand. We have to relate it to any other consumer upgradation, which is happening through any other category, okay? I mean, for the sake of simplicity, let's talk about pizza as a category, okay? We have seen in metros, various metros and now even in mini metros, a lot of people upgrading from pizzas to, say, gourmet pizzas, okay? And finally, the people who are not eating pizzas are eating pizzas. And people who are not eating anything, they're eating something now. So that's the whole consumer pyramid on which India growth story, India consumer growth story, India consumption story is getting built up, okay? So this whole OTT as a phenomena has been there for some time. So as Piyush mentioned, certain percentage of people do upgrade to OTT, which is the case with many other industries as, right, just mentioned, okay? But that gets compensated by growth at the bottom of the pyramid, okay? There's a city report also which is available on -- at the whole pay TV sector, which can be read by all investors. That clearly gives a lot of data in terms of what kind of growth is happening at the bottom of the pyramid, how a lot of new users are coming with the growth of TV industry, pay TV industry, okay, and growth of rural income, et cetera, et cetera. okay? What we observed is during pandemic time, the growth at the bottom of pyramid has slowed down, okay? While the -- whatever marginal migration to OTT is there, that continued, okay? Finally, of course, our whole commercial point, which you spoke about, that's, of course, valid that a lot of commercial establishments, a lot of paying guest accommodation, hotels, hospitals, a lot of such establishments, they kind of didn't renew their TV services. So we are hopeful with the pandemic -- as we come out of pandemic and overall economy is taking the right shape we are hopeful that bottom of pyramid growth story will start again, which was a case till around 6 to 8 quarters back, okay, which will more than compensate for our migration to OTT, whatever little that's happening. And of course, finally, the management has to execute their market share plans for which a lot of work is happening, okay? Now we move to broadband. Broadband, I answered you last time. I'll probably repeat the same answer only in the last quarter conference call. Let's talk about 2 players. One, you spoke about wireline broadband and second, satellite broadband. Now satellite broadband is very easy. Last time, I spoke at length in fact about it, okay? World over, our experience has been satellite broadband is more used for areas where wireline is not possible or wireline is not viable, okay? So essentially, if you have a -- for example, just as a placeholder, you have a kind of farm house, say, in 100 kilometers from Bombay, where there is no wireline facility, because not viable for any wireline players to kind of take their fiber there because there are not too many farmouts in that area, okay? In that place, satellite broadband typically has been used quite successfully in U.S. and some of the developed countries, okay? Essentially, the onetime costs of establishing the signal is quite high. Consumer has to pay for consumer premises, equipments, which are in thousands of dollars, okay? And after that, there are monthly charges which are significantly higher than the wireline broadband ARPU, okay? The satellite broadband is essentially for areas where in general, reach of wireline broadband is not very feasible, okay? With the kind of consumption, which is happening on wireline broadband in India, specifically GTPL, which is now greater than 200 GB per consumer per month and with the kind of ARPUs, which is INR 400 to INR 450 ARPU, okay? Absolutely, there's no way any satellite broadband has any kind of opportunity to meet that. But essentially, we will see, in India also, many more players will enter in satellite broadband. But as I rightly mentioned, from the perspective of reaching those areas which cannot be reached by wireline broadband. Second point, competition within wireline broadband, okay? Gujarat, we have spoken many times. Gujarat GTPL has the best understanding of how market works on the ground. They have the access to all the home pass because of dominant share in the cable TV industry, okay? And our competition has been there for some time. I mean, there's no new competition coming. Whatever the existing competition is there, they had been aggressive for quite some time now. I mean, I think last 3 years, this industry has seen one of the highest level of competition because of which, obviously, industry also has grown, specifically in non-metros, okay? And in spite of that, this has been the best season for GTPL. The experience has been as more players have come and worked in the market, okay, that has helped us, the industry growth. That helped us. Consumers realized that there is a case for wireline broadband, which is where GTPL has seen this growth. And GTPL ARPU versus speed GB value creation for consumer, that remains the best in the industry. Nobody today is offering this kind of product at a value of INR 400 or INR 450 or INR 500 okay? If you can compare -- I mean offline, you guys can take details from Piyush. He can share with you, okay? But approximately, GTPL speed and GB equation is twice or double as compared to any of the nearest competition, okay. So I think management is quite confident of keeping the growth trajectory on broadband.

Okay. Can I put in a follow-on question, please?

Yes. Go ahead.

Okay. So far, you were only in Gujarat as far as wireline broadband is concerned. Now these hybrid boxes are coming out, and you'll be able to offer, all over the country, wherever your cable operations are there, the hybrid box can go over there. So can you offer any comments as to what would be the price value equation? Because this one box will be giving you both cable as well as broadband. So as a combo product, what is the price value offering that you have compared to the competition? Are you -- how cheap are you? That is one part. And second, once you roll this out, what kind of margin changes can one expect at the company as a whole? Two parts. There were 2 questions that I asked.

No, no, we understand. So there seems to be some lack of understanding of the product, which we keep on talking about it, this whole hybrid box. First thing to clarify, this doesn't give any broadband. Infrared uses broadband, okay? So whether we lock it with GTPL broadband or not, that's a management decision, which I'm sure they'll take it over a period of time, okay? So the product is not giving any broadband, okay? It's a setup box, which can take WiFi input technically from any service provider, but for us, it's possible to lock it to GTPL Hathway, okay? So it doesn't give any broadband. It's a normal cable TV setup, which also has the ability to give OTT by taking WiFi input from any broadband service provider, okay? And based on the business strategy for a particular state, GTPL Hathway can take a call whether to lock it to GTPL broadband or not, okay? Now in terms of GTPL Broadband, we clarified earlier also, it has been a management decision. That's why next few quarters, okay, next few quarters, next 3, 4 quarters or even a little more, we'll focus primarily on Gujarat as we have a huge amount of home passes still are available. And we would like to take a full position in Gujarat itself, okay? Because that's where a lot of potential is still available, okay? And that's where we are a dominant leader in cable, okay? So while technically, we can obviously go to many other sales. But I think that required -- we had to balance out in terms of investment, return on investment and areas where we feel we can take a full position. So next 3, 4 quarters, we'll focus on Gujarat only in terms of taking a full position there. And I already clarified your answer with the box.

The last part regarding margin, if you could elaborate.

Anil, for margin and pricing on the boxes, let me take you one-to-one. As I said that we have just did the soft launch. Hard launch is going to be around Diwali. So wait for that or we can have one-to-one on that.

[Operator Instructions] Next question is from the line of Shivam Saxena from ICICI Bank.

So I just want to understand how much is the competition between broadband and cable TV segments? Are not these 2 segments competing with each other in the metro, especially in these metro areas?

See, the competition is because cable TV is more of the content, and broadband is more of connectivity. So the competition is not between broadband and cable TV. The competition can be on between entertainment to entertainment, can be on connectivity to connectivity. So if you talk about that you are getting OTT through broadband and that is the competition with the cable, that's a different thing. But there is no competition between...

Yes. I'm saying that only.

That's we have already given that, that Rajan has explained that hierarchy of pyramids, it is, yes. So that's -- I think we have answered that.

But how are you seeing your subscribers? So basically, are the cable TV subscribers giving up their connection if they are getting good broadband? What is your customer profile?

We consider ourselves as a pipe. As we said, that through hybrid box, we are also introducing OTT. And in the future, we are going to introduce OTT as a distribution also. So we consider it ourselves as a pipe. We are right now giving the broadcasting channels as a -- and coming to the -- taking it to the houses. We'll take it -- any services means the OTT services also to the houses. So we look ourselves strategically at a time, which is reaching to the customer house.

[Operator Instructions] The next question is from the line of Gautami Desai from Chanakya Capital.

Yes. I mean, this is a broader question, maybe for Anu Bhai. Anu Bhai, by doing this hybrid box, aren't we encouraging cord cutting? By what I mean to say is that in -- like Piyush just said that for OTT, we are just a pipe, right? Yes, I agree that you are a pipe. But for OTT, we are not paid. Whereas for cable TV, we have a sizable cable TV population for which we are paid. So I just want to understand that -- and when I'm saying that are we encouraging cord-cutting by hybrid, what I mean is that there could be people like who are kind of lazy or ignorant or something and they're just watching cable TV because it's there. But once they have a hybrid and they learn to see OTT, is there any -- this cable TV provide anything different from OTT where we feel that even if the customer has OTT, he will go for cable TV? Is there any [ sense ] in cable TV?

Piyush, I will take this one, and then Anu Bhai can add to that. Hello?

Hello?

Piyush, am I audible?

Yes, correct. [ Go ahead ].

Yes. So I'll take it and then Anu Bhai can add to that.

Yes, go ahead.

So Gautami, some technical clarification. The hybrid box, as I mentioned, the controls are in hand of GTPL actually, or any other service provider for that matter, okay? So the way a box typically is configured, I know the box will, anyway, not work if the cable connection is not active. The world over itself, the cable hybrid boxes, whichever cable service provider has kind of deployed these boxes. Of course, the first priority is cable TV. And so boxes can be configured and they're already configured in such a way that if the cable services are not active, the box, anyway, will not work, okay? And this whole debate of OTT versus cable TV. Look, let's understand first, consumer needs are evolving. And that is not something which I think is a healthy to kind of for us to intervene. Consumer needs are evolving, and they will evolve in a particular way. So earlier, consumer needs were limited to, as a family, watching TV together. Now consumer needs are really kind of -- they have multiple needs. There are times people want to watch OTT on their single-screen device. There are times people want to enjoy Bella Ciao or sitting there in the living room with their near and dear. There are times they want to enjoy live [ ticket ] TV without any interruption, without the app kind of collapsing on a live TV, without any fear of app actually collapsing or anything like that. So consumer needs are now quite kind of different. It's not only one need. They have multiple needs. An idea of hybrid box always has been to ensure that we, GTPL Hathaway, as a company, we are putting the door in whichever segment consumer needs are there, okay? So through the single box, we can offer consumers large-screen experience in OTT even if they don't have smart TV. Even if smart TV is there, smart TV doesn't offer all the apps, okay? Finally, by having this box there, we know much more about consumer viewing habits because the kind of analytics we have in hybrid boxes now much, much better, okay? We have a broadband opportunity once that box is there because we know which broadband player is there on that box if we allow other broadband players. So we have the ability to cross-sell our GTPL Hathway broadband, okay? And we, of course, get a pie of the OTT revenue as well, okay? Because we can't really change consumer needs. But finally, making sure the box works only if the cable has been recharged, okay, that, obviously, control is in our hand. Anu Bhai, feel free to add. I just thought some specific points I at least mentioned.

Yes. I agree, Rajan. So basically, this hybrid box is non-smart TV will convert into the smart TV. [Foreign Language] pre-integrated OTT applications limited [Foreign Language] whether it is a national level, international level or regional level, the TV's on OTT applications. [Foreign Language] whether it's a black and white, whether it is any SRT television, so a non-smart television or sub-televisions [Foreign Language].

[Operator Instructions] The next question is from the line of Ankur Periwal from Axis Capital.

So to start with first question on the broadband side. Now your presentation has mentioned 4.2 million home pass and roughly 700,000, 750,000 are [ unit ] active subscribers. Can you help us understand how has this been broken up in terms of our existing subscriber base -- existing cable subscriber base across Gujarat, Maharashtra, West Bengal, et cetera? And Uttar Pradesh, wherein we are probably offering only broadband and no cable there.

Yes, good. So out of 7 lakh 35,000 subscriber...

95%.

Yes. Around 95%, 93-point-something percent is in the Gujarat. So we are mainly focused in Gujarat right now increasing our sub-base on that. Apart from that, we have 6 cities where we are operating: Pune, Nagpur, Jaipur, Varanasi, Patna and Hyderabad, but we are growing there. But the focus is mainly in Gujarat right now.

Fair enough. And of this, let's say, 90% of the 700,000, so let's say, rounding off numbers at 0.7 million subscribers, how many of these will be the combo offers, which is -- which we will be giving, which is basically we are offering cable as well as broadband to the last-mile consumer?

So a big combo offer are [Foreign Language]. So now we are going forward completely whether it is a broadband, OTT or cable TV. All put together, we'll will also launch this combo.

So sir, will it be right to say that out of, let's say, 7.5 million paying subscribers, and maybe a large part of these subscribers coming out of Gujarat, that will be still an incremental opportunity for you on the broadband side to ramp up?

Yes, in Gujarat, yes.

Okay. Fair enough. Okay. So sir, a second question, I'm referring to your Slide #27, which is basically the P&L breakup that we have shared in terms of different segments. So not looking at Q-on-Q numbers, but largely speaking, carriage will be more or less flowing down to EBITDA. And in earlier comments, Rajan did mention broadband business being the 40% EBITDA margin there. So if I do a backward math out of INR 550 crores EBITDA, is it the case that ex of carrier placement, the cable -- the core, core cable business is EBITDA-negative right now at INR 120 per month ARPU net to us?

Ankur, in last call also -- last, last call also, whenever we have to calculate the gross margin on cable TV, we have to consider subscription CATV, pay channel cost and your marketing, which is one you are paying to the broadcaster, one we are getting from the broadcast has to be netted out. So that's where you have to see the business, after netting out the pay channel cost and placement revenue.

Okay. So what you're suggesting is out of let's say, INR 550 crores minus maybe INR 110-odd crores of EBITDA from broadband, one should look at that as a cable business on the balance, INR 2,150 minus the INR 600 crores -- sorry, INR 280 crores of broadband business.

Yes. [Foreign Language] content cost minus marketing placement or [Foreign Language]. To derive content cost will be around coming around INR 51 or INR 52 against INR 130 cable TV ARPU.

Sure. And sir, just on when you were talking about 20%, 25% increase in ARPU, which is, let's say, around INR 120 going to maybe a INR 150, INR 160 run rate, the absolute EBITDA or let's say, gross profit on a per subscriber basis, do you see that number increasing? Or probably that's one that this delta will also be resulting in a higher content cost?

Yes, yes, this is going to be accretive to EBITDA, directly accretive to EBITDA, any increase in ARPU.

[Operator Instructions] The next question is from the line of Miten Lathia from Fractal Capital.

If we look at the pricing that has been announced by most of the broadcasters, their -- that their -- without pulling out their flagship out of the books and wanting to price it separately, with this sort of pricing, how do we look at our ability to be able to maintain our packs the way they are today? And what should be the implication for the gross margin that we endure?

So Miten, [ we're ] actually pricing discussions and NTO 2.0.

Yes.

[Foreign Language]

Does this answer your question, Mr. Miten?

No, no. I had just one clarification that I was seeking. Should we expect that the customer will end up paying more even after NTO 2.0? I don't think [Foreign Language].

Miten, as kind of, of course, you understand and Anu Bhai's also saying, so there are a lot of moving parts over the next 60 to 90 days, right, for this implementation, okay? And as the MSO service provider, of course, our task is to make sure as smooth rollout as possible, both with the consumer and trade. And we're going to take help of all broadcasters and all stakeholders and, of course, all the governing bodies and regulatory bodies, et cetera, okay? So there are a lot of moving parts. The endeavor is to make sure it should be -- implementation should be very smooth, and there shouldn't be any shock for any of the stakeholders in system. And we're going to seek support of kind of, as I mentioned earlier, all other stakeholders were there with us so that its implementation is smooth. And I think everybody wants in. And as and when we have more specific plan, we'll come back to all of you and update.

As there are no further questions from the participants, I now hand the conference over to the management for closing comments.

Thanks, everyone, for joining the GTPL Quarter 2 FY '22 Earnings Calls. We look forward next quarter to talk to you for quarter 3 results FY '22. Thanks a lot. Be safe, be healthy.

Thank you.

Thank you. On behalf of Emkay Global Financial Services, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.