India C&S TV distribution
The top down narrative of India Pay TV distribution is positive (1) market share ahead of global averages, (2) superior growth profile and (3) low ARPUs (with potential for above inflation hikes). So why have stock returns not matched the potential? The unorganized, multi-tier Cable TV network in India has constrained valuecreation. The government’s Cable digitization mandate has made progress, but monetization is slow; coupled with large investments (STBs, backend), the ‘side-effect’ of rising near-term financial leverage (Net-debt/EBITDA >5x) has become the ‘primary’ concern. Post 10+ years of investments, DTH is maturing (moderate growth but FCF positive and robust c.20%+ returnprofile). Buy Dish TV; Hold Hathway.