The promoters of IPTV and VoIP company Aksh Optifibre have made an open offer to buy back 31,325,227 shares, representing 20% of the total diluted paid up capital at a value of Rs 7 per share. The promoters currently own a 13.23% stake in the company. After the buyback their total stake would increase to 33.23%. Aksh has clarified that the Offer is not due to any global acquisition resulting in indirect acquisition and that the promoters at present have no intention to sell, dispose of or encumber any significant assets of Aksh in the next two years, except in the ordinary course of business. Although the offer was supposed to open on 18th November, the final observations on the draft by SEBI are still awaited, which has led to a delay in the commencement of the said offer.

Over the period of one year, the company’s share prices have declined from Rs 21.35 to Rs 5.50. Usually, promoters offer buybacks to take advantage of the fall to increase their stock holding. The company’s services business which comprises of IPTV (iControl) and VoIP (Pigeon) ventures, which are franchisees for government owned telecom operators BSNL (20 cities in North India) and MTNL (Delhi and Mumbai) witnessed losses amounting to Rs 3.73 crore, during the last quarter.

Failure of IPTV in India

IPTV has been a non-starter in the Indian market, with a very low connection base, a result of telcos and ISPs not pushing the service aggressively, lack of sufficient bandwidth and low quality of service. Although state owned telcos MTNL and BSNL have had more than one vendor deploying IPTV services, customer adoption has been dismal. In contrast, DTH subscribers have increased significantly, as the country gears up for a complete switch over to digital broadcasting. Companies like Airtel have positioned the service as a convergence of communication services, while MTNL and others focused on features like access to old tv content. Perhaps, this approach did not work for the telcos and their franchisees.

– MTNL Delhi, which runs IPTV services through two franchisees, namely Aksh and Smart Broadband (MyWay had around 5910 IPTV connections and an ARPU of Rs 298/month as of February 2011, a decline compared to 7741 connections and an average revenue per paying user of Rs.188.19 per month in March 2009. We had visualized the IPTV operations of the company in one of our charts.

– Airtel had also informed that it was going considerably slower on its IPTV service as compared to its DTH service, since it felt it was more for the masses and a value add to the broadband service. Although it was selling the service with the promise of ‘triple play’ or a converged experience combining the phone line, broadband and TV.

– It was reported that MyWay, one of the franchisees offering IPTV services for BSNL was shutting down operations in Chennai, following poor subscriber uptake.

What went wrong?

In our opinion, telcos and vendors have failed to create awareness about the medium’s capability to offer a two-way link for data exchange that can be used for interactive applications. Infact, having used Airtel’s IPTV for a few months, I can say that although there were applications such as a Pizza Hut app that lets users order Pizza through the system, in addition to time-shift, and access to 7 days of previously telecasted content, a lot could have been done to leverage the interactive side of the medium.

Also, the service experienced technical glitches which led to outages, which does not justify the high cost of service. Browsing through channels was also a bit more cumbersome due to a lag since data takes time being pulled from the server.

Also read:

Why Not Do Away With All IPTV Regulations In India?
Is IPTV Just A Limited Form Of The Internet?