'Tata Play's DTH Ops expected to be under stress this fiscal year'

IPO-bound content distribution platform Tata Play's revenue from the core direct-to-home (DTH) business is expected to slip downwards in fiscal 2023 due to moderation in average revenue per user (ARPU) and active subscriber base, said Crisil.

In its rating rationale report on the company, the agency noted that the company's consolidated revenue will be supported by Tata Play Binge and broadband businesses.

It added that the operating margins might come under pressure in FY23 due to operating losses accruing from Tata Play Binge, which aggregates over 14 over-the-top (OTT) apps in a single app.


Tata Play Binge and the broadband business had helped Tata Play post a small growth in consolidated operating revenue in FY22 despite a decline in revenue from the core DTH business.

Tata Play had recorded revenue of ₹4,741 crore in FY22 compared to ₹4,682 crore in the previous fiscal. Net profit was flat at ₹69 crore.

Crisil has reaffirmed Tata Play's long-term and short-term ratings for bank loan facilities worth ₹8,000 crore.

It added that the ratings reflect Tata Play's healthy business risk profile and market position.

As per the Telecom Regulatory Authority of India (Trai) data, Tata Play had a 32.8% share of the active pay DTH subscriber base, as of June 2022. The total active pay DTH base stood at 67.04 million.

The revenue for the DTH industry has been under stress due to competition from DD Free Dish, the free DTH platform of Prasar Bharati, and OTT platforms. Add to that, the new subscriber additions for DTH platforms are taking place in rural areas where the ARPU levels are low.

Crisil noted that Tata Play's ARPU has moderated in the last few quarters due to the higher addition of rural subscribers in the overall subscriber mix.

Tata Play is the first company in the country to use the confidential pre-filing of documents option for its initial public offer (IPO).

ET had earlier reported that the company is looking to raise ₹2,000-2,500 crore from the IPO.

As per Tata Play Broadband's rating rationale report, Tata Play had infused equity worth 455 crore into the company in FY22.

Tata Play Broadband, a subsidiary of Tata Play, had seen its FY22 net loss drop by 13% to Rs 148 crore. During the fiscal, revenue jumped 96% to Rs 174 crore. As per Trai, Tata Play Broadband had 0.34 million subscribers, as of June.

While noting that the broadband business will complement the DTH business of Tata Play, the rating agency said the broadband business will remain exposed to project implementation risks and competition from other players.