business std harit nagpal interview
TRANSCRIPT
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7/31/2019 Business Std Harit Nagpal Interview
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Q&A: Harit Nagpal, MD & CEO, Tata Sky'The bureaucratic hurdles around the dth business are very large'
Vanita Kohli-Khandekar / New Delhi September 2, 2011, 0:08 IST
Harit Nagpal, 50, must be a glutton for punishment. Latelast year the former director marketing for Vodafone Group,
UK, relocated to India to run a loss-making direct-to-home
TV operator. As managing director and CEO of Tata-Sky,
he has the unenviable task of figuring out how to make
money in a very competitive market with six players, low
average revenues per user (ARPU) and a regulatory
tangle that foxes the best of minds. At 7 million out of the
35 million subscriber DTH market, Tata-Sky is not in a bad
place. But it is the how to achieve profits question that is dogging the
company. Over the five years since its launch, this 80:20 joint venture between
the Tata Group and Star Group has sunk in Rs 5,000 crore or just over a billion
dollars into the Indian DTH market. There are, however, no signs of a break
even. One week before he completed a year at Tata-Sky, Vanita Kohli -
Khandekarhad a long chat with Nagpal on how he views this industry. Editedexcerpts:
From telecom to media what are the big differences?
I am not feeling out of place. I have spent the early years of telecom, in telecom;
saw the first five million telecom subs. This [the DTH business] reminds me of
the early years of telecom. It has come farther in five years than telecom did. It
has all the problems that go with scaling up. Both [telecom and DTH] are
technology services, consumed by a fragmented and large customer base.
There are elements of technology in the service and distribution. It is a new
business so one has to understand the dynamics. But I have been part of
nascent businesses earlier at Lakme, Pepsi and Marico. So the operations are
easy to handle because all the variables are in our control.
The problem is that after opening up this sector, growth is being held back. The
ministry of information and broadcasting (MIB) has allowed 700 channels into
India, but my satellite capacity is only up to 300 channels. I am ready to buy that
capacity, but am not getting that meeting with ISRO for a year. [It is mandatory
for DTH operators to buy satellite capacity from the Indian Space Research
Organisation. Capacity on foreign satellites can be bought only through ISRO.
ISRO incidentally does not have enough KU-band capacity to meet the
demands of the Indian market]. I have lost four satellites in the process
[satellites that wanted to sell KU-band capacity over India and have moved on
to other markets after waiting for ISRO]. And I am still stuck providing 300
channels. Just give me the freedom to go to the satellite operator that has
bandwidth.
Why not lobby for a change in policy, there are six of you?Who should we lobby with? Is there one person willing to or capable of taking a
decision? We are meeting people constantly, but is there hope. I am not so
sure. It will take longer. Tata-Sky has already put in Rs 5,000 crore. It will
probably put in another Rs 5,000 crore over the next few years before we get a
rupee. Break even could take 10 years. You could cut it down to six-seven
years by giving a tax-holiday or tax breaks.
The bureaucratic hurdles around this business are very large. For example, this
industry pays 30 per cent tax on revenues. Show me another fledgling industry
paying those kind of taxes? DTH came in because of the under-declaration by
cable operators. You are putting a 30 cent tax from day one on a sector from
which you [the government] are making more money than cable. What is the
intention of the government? Is it to allow addressable digitisation, get taxes,
ensure broadcasters get a fair share and customers get interactivity? If that isthe intention then either provide the infrastructure or let me buy it. Instead of
focusing on creating infrastructural support we are focusing on the wrong
things. This industry will make money for everyone in the long term. The
government will get more in taxes, broadcasters in pay revenues and DTH
operators in revenues.
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7/31/2019 Business Std Harit Nagpal Interview
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There have been many product changes to Tata-Sky in the last six
months. What is the logic?
We have done a lot of work to make the product as customer-friendly as
possible. We are not selling metals but entertainment, so why were our
packages called gold and silver. We have recreated our packages to make
them easy to use. So if you say I am in the mood for Hindi movies you know
what package to buy. There are packages for English entertainment, Hindi
entertainment and so on.
That must be a nightmare at the backend.It is complicated at the IT and installation level to create and execute.
Your comment on costs and revenues, both are problem areas for most
DTH operators.
In the long term, the cost structures of the leading DTH operators tend to
converge. I dont see an opportunity for huge cost reductions in this industry.
Dont see mergers and acquisitions happening as easily as they did in telecom.
Any DTH operator, who buys another operator, has to re-point all the
subscribers to his satellite. Plus you have to re-price the new consumers and
the chances are you will lose the consumer.
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2 24-05-2012 04:01 PM