Dish TV stock falls 6% as concerns rise over closure of Videocon D2h deal
Shares of Dish TV dropped 6% after the company informed that the effective date of merger closure date of December 27, 2017 was delayed due to the ongoing insolvency proceedings against the Videocon group.
Dish TV and Videocon d2h had announced a merger in November 2016. The transaction was expected to be closed by December 27, 2017. However, due to certain entities belonging to the Videocon group, including the promoters of Videocon d2h Ltd, having become subject to insolvency and/or enforcement proceedings by lenders, has led to the delay.
Dish TV indicated that the company is evaluating if there is any impact of the same on its rights and obligations under the definitive agreements and consequential effects on the transactions contemplated thereunder.
Further, Dish TV informed that the advisors to the transaction have been asked to evaluate the position and advise the company with their findings within 60 days.
The stock is currently trading at Rs79.1, down by Rs4.85 or 5.78% from its previous closing of Rs83.95 on the BSE. The scrip opened at Rs82.2 and has touched a high and low of Rs82.75 and Rs77.25, respectively.
Dish TV is Asia Pacific’s largest direct-to-home (DTH) company and part of the Essel Group. It has a total bandwidth capacity of 864 MHz. Its revenue consists of DTH (63%), Infra Support Services (36%) and others (1%) in FY17.
We expect its merger with Videocon D2H to be completed by FY18E and is likely to benefit the company. With this merger, company expects to increase its market share to ~48% (25% in FY17) by FY19E. Moreover, it has initiated aggressive penetration into non-digitized markets. Phase III has 86% digitised market, but Phase IV digitisation opportunity still stands at 30-35 mn. Overall, we expect revenue CAGR of ~7% over FY17-19E (vs 4% CAGR over FY15-17) backed by revival in subscription and ARPU. Moreover, company expects deeper penetration through the launch of Dish99 which allows customized packages. Also, we expect company’s D/E to come down to 1.1x in FY19E vs FY17 D/E of 2.3x. Consequently, we see PAT CAGR of ~30% over FY17-19E.
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Via:: Stock – India Infoline