India’s direct-to-home operator Sun Direct has raised Rs 260 crore in FY 14 through rights issue to fund its capital expenditure requirement.
Sun Direct’s existing shareholders—the Marans and Malaysia’s Astro Group—subscribed to the issue in proportion to their holding in the direct-to-home (DTH) company. While the Marans hold an 80 per cent stake in Sun Direct, the remaining 20 per cent is with Astro.
The rights issue comes on the back of Sun Direct’s appetite to expand in the cities covered under Phases III and IV of digitisation. With multi-system operators (MSOs) less entrenched in these markets and having invested heavily in the first two phases of digitisation, there is an opportunity for DTH operators to grow their subscriber base.
Sun Direct has 9.2 million gross subscribers while the net subscriber base is six million, according to industry estimates. Around 36 per cent of its subscribers come from Tamil Nadu while the remaining three southern states of Andhra Pradesh, Karnataka and Kerala account for another 53 per cent. The churn is at 1 per cent over a 90-day period.
The company’s acquisition cost per subscriber is around Rs 2,400, out of which Rs 1,000 is for set-top box (STB). Adding more subscribers, thus, requires capital infusion.