Dr. Kailash Choudhuri, Managing Director of BSE listed Aksh Optifibre understand the learning curve that the IPTV industry will have to go through better than most. Following the announcement of Aksh Optifibre’s financial results last week, MediaNama spoke to Choudhuri about the state of rollout of the companys iControl IPTV services, in partnership with BSNL and MTNL. Part 1 of the interview:
What is the State of your iControl IPTV rollout?
We have fully operational network operating centres (NOC) in Delhi, Mumbai and Jaipur, and close to 20,000 subscribers. In terms of cities, we’re commercially providing IPTV in Delhi, Mumbai and 20 cities of North and West India.
The revenue for your services segment (IPTV and VoIP) has fluctuated over the last year…
That’s only in the last 2-3 quarters. If you go beyond that, then the services sector has been represented by our networking division, which we have now separated. Most of the services which we are running were largely not being charged. Pigeon (VoIP) is now a mature service and we are regularly charging our customers. It is the last quarter which represents the growth in revenue for VoIP and IPTV.
Well, in Q4, there was a dip in revenue…
It is slightly skewed because of the way we account our services revenue: We account only for our share, not what the end customer pays. A Pigeon (VoIP) customer pays a monthly rental of Rs. 200 and runs up a bill of Rs. 200-300 via international prepaid dialing coupon, which if you multiply by our customers of about 9300, it should translate into revenues of Rs. 50 lakhs. We only account for what we get after after deducting gateway charges etc. Largely, our net ARPU for IPTV and VoIP combined is on an average Rs. 150/subscriber. Till now it was not very clear, because we launched commercial services with BSNL in January. Every city had a 1-2 month warmup period where we don’t charge. Now all those subscribers will come into the charged subscriber base. Same is true for Delhi and Mumbai.
Any targets for the next fiscal?
We are targeting to close this financial year with around 80,000 subscribers for iControl, and 25,000 for Pigeon. Both operations will become self sufficient, OpEx break even, by the time we reach these numbers. We are consolidating our operations and trying to make it more efficient in terms of OpEx. Fund raising is not an easy task. We now know the most cost-effective means of driving subscription, and the features that customers want to see.
What is the sense that you’re getting about IPTV from consumers?
The sense that we are getting is varied – there is one extreme that is highly dissatisfied, because the process – involving both us and MTNL – is long. Those without an MTNL landline have to be first given a landline, then broadband, then iControl. People whose homes are farther from the exchange have suffered. There are challenges in Delhi and Bombay because of the co-ordination with MTNL and the quality of their lines. Overall, reaction from BSNL customers is positive. Viewers watch an average of 8 hours per day, and tend to prefer Colors as a channel.
Those customers with existing broadband connections are satisfied. There is one group of people whose only connection at home is IPTV, others who had Tata Sky as their 2nd and 3rd connections because of low additional subscription costs, who have switched to IPTV once they’ve seen it.
We are doing around 100 customers a day, and any awareness increase by Bharti Airtel and MyWay helps IPTV on the whole. We plan to bring begin advertising in June, highlighting our new services.
How much are you looking to invest in the coming fiscal?
Over the last year, we have invested heavily in creating network operating centres. Those costs are irrespective of the subscriber base. We also spent on advertising in the print medium and outdoors. Now the costs will be in funding the set-top-boxes. We’re not selling the Set Top Boxes (STB), to raise the connections. We were giving the STBs at a refundable deposit of Rs. 999, which we plan to raise that to Rs. 1499 for BSNL. We feel that IPTV set top boxes should not be sold to the subscriber, because they are not ubiquitously used.
The increase in refundable deposit should help in the cashflow for the hardware. The last 2-3 quarters have not been good for us on the manufacturing side, and we’ve not been able to generate the cash we wanted because of the large forex fluctuation. We import in Yen, and it went up from Rs. 0.40 to Rs. 0.51. We presume that the currencies have now stabilized. Demand is good in manufacturing, and we feel that both the divisions will start generating cash.
Do you plan to raise money?
Yes, we’re looking at raising $10-15 million will take us to a subscriber base of 200,000. Besides looking at FCCBs, we are also looking at strategic investment. A part of the funding will also go into customer acquisition, since we’ve been able to stabilize the process. We’ve strategically divested our manufacturing unit into a 100% subsidiary, otherwise it was confusing for investors with services and manufacturing division in the same entity – one being equity based and other debt based.