labels: Economy - general
Beleaguered DTH operators seek tax relief news
18 March 2009

Hit by a slow growth in subscriber base, India's direct-to-home TV service providers yesterday urged the government to re-examine at the four-layer tax system imposed on them.

''The industry is dogged by four levels of taxation - service tax, VAT, licence fee, and entertainment tax. The industry will approach the government on this matter,'' Dish TV chief operating officer Salil Kapoor told reporters on the sidelines of a conference organised by the Cable and Satellite Broadcasting Association of Asia (Casbaa).

Kapoor said the hardening of the dollar against the rupee had impacted DTH operators adversely because they were forced to offer set-top boxes (STB) at subsidised rates despite a 10-15 per cent increase in prices at which STBs are imported. Hence the DTH players had not benefited much from service duty cuts

Tata Sky managing director and chief executive officer Vikram Kaushik concurred. ''The DTH industry can face massive losses in the years to come on account of low average revenues per user (ARPU), and also the duty that each service provider has to pay while importing hardware,'' he said.

Kaushik elaborated that with cost of acquisition of subscribers being as high as Rs4,000-Rs5,000 and ARPUs being as low as Rs100-Rs150, the break-even period could go over 8-10 years. A high churn rate also increases the liability for DTH operators.

"Moreover, the government does not allow content exclusivity, adding to the woes of the DTH operators. ''In a few years to come, one can expect consolidation or players winding up business,'' Kaushik said.

At the same time, this does not seem to have stopped the companies from launching new offers and services. Kapoor said Dish TV expects to add about three million subscribers this year, taking the total number to eight million, as it plans to launch new value-added services and channels in the year ahead.

He said the Essel Group firm would offer more movies on a pay-per-view basis, but declined to disclose details.

Big TV DTH head Ashutosh Srivastava said, "While we have lots of challenges to overcome, there is still scope for healthy growth. And this can be achieved by offering new and enhanced services to customers."

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Beleaguered DTH operators seek tax relief