Den Networks faces a tall order as financial signals turn hazy

By ETNow Bureau

Nothing seems to be working for Den Networks, the multiple system operator that once claimed to be the first such player to become profitable.

Sample this. An investment of Rs 100 in Den Networks during its IPO would have eroded to a meagre Rs 30 now!


The financial numbers reveal a worrying pattern. Revenues over the last five years have moved both ways, a sign that stability is yet to return. This at a time when broadband penetration and data usage in India have been on the way up.

"Den’s tussle with Zee has hurt their numbers in Q1. Additionally, broadband is not their forte and I’m not too optimistic on the franchise model strategy that they wish to adopt," said Dipesh Mehta, SBICap Securities.

It's facing troubles on the dividend front too. With a Beta of more than 1, many say it’s in choppy waters as well! Even the RoE scorecard does not make for an interesting reading, which is still in the negative zone.

Investors are taking note. FII holding has already dropped in the last 2 years to 16 per cent, from from 21 per cent. Brokerages across the board have slashed their EPS and EBITDA estimates on the scrip.

Falling debt levels may have pushed down finance costs, but profits have been on a downhill. This in a way suggests the company’s reduced ability to service interest payments.

Launch of JioGigaFiber, a corporation ready to loosen purse strings, is posing a big headwind for the MSO. Additionally, declining data usage, a lower broadband subscriber base and higher content costs are giving the entertainment company a hard time.

Evidently, the MSO player is up against a difficult terrain to negotiate.