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Press Release

Videocon d2h Limited: Fiscal Year Ended March 31, 2016 Earnings Release

Company Release - 5/24/2016 6:38 PM ET

MUMBAI, India, May 24, 2016 /PRNewswire/ --

Subscription and activation revenue grew 26.4% to INR 26.07 billion

Adjusted EBITDA[1] grew 31.5% to INR 8.01 billion

Net subscriber[2] base stands at 11.86 million

Highest net subscriber additions for 6th year in a row[3]

Record approximately 800,000 gross subscriber[4] additions during the quarter ended March 31, 2016

Videocon d2h Limited (NASDAQ: VDTH) ("Videocon d2h" or the "Company") announced its financial results for the year ended March 31, 2016.

(Logo: http://photos.prnewswire.com/prnh/20160519/806055 )

Key highlights for the year ended March 31, 2016:

  • Revenue from operations grew 22.2% year on year to INR 28.56 billion;
  • Subscription and activation revenue grew 26.4% to INR 26.07 billion;
  • Adjusted EBITDA grew 31.5% to INR 8.01 billion;
  • Adjusted EBITDA margin expanded by 200 basis points to 28.1%;
  • ARPU[5] grew from an average INR 196 in fiscal 2015 to an average INR 207 in fiscal 2016;
  • Gross and net subscribers increased by 2.65 million and 1.68 million subscribers, respectively, during the year;
  • Net subscribers base at 11.86 million; and
  • Churn came in at 0.73% per month in fiscal 2016 as compared to 0.80% in fiscal 2015

Key highlights for the quarter ended March 31, 2016:

  • Revenue from operations grew 23.4% year on year to INR 7.72 billion;
  • Subscription and activation revenue grew 20.9% year on year to INR 7.06 billion;
  • Adjusted EBITDA grew 25.0% year on year to INR 2.19 billion;
  • Adjusted EBITDA margin expanded by 40 basis points year on year to 28.4%;
  • ARPU increased from INR 202 in Q4FY15 to INR 214;
  • Gross and net subscribers increased by 0.79 million and 0.59 million subscribers during the quarter, respectively; and
  • Churn came in at 0.58% per month

Commenting on the fiscal 2016 results and company outlook, Executive Chairman of Videocon d2h, Mr. Saurabh Dhoot, said "Fiscal 2016 has been a landmark year for Videocon d2h, as it was the first fiscal year after our NASDAQ listing, and it has been a great journey. I am delighted to share that our strong net subscriber additions, rising revenue realization and operating leverage benefit resulted in 31.5% Adjusted EBITDA growth for fiscal 2016, in spite of increases in service tax rates and the implementation of a new 'clean India initiative' tax during the year."

"During the year, we accomplished numerous technological advancements, such as the development of HD Smart Connect Set Top Box, our new connected set-top box which allows customers to view normal DTH services as well as internet and over-the-top content and applications. This development demonstrates our expertise and innovation in creation, delivery and execution of technologically advanced products."

Speaking on the business outlook for the DTH sector, Mr. Anil Khera, CEO of Videocon d2h, said "There have been a series of industry developments in fiscal 2016, which we believe will provide for growth opportunities in the DTH sector in India. The implementation of Phase III digitization of the Digital Addressable Cable TV System program of the Government of India that began in January 2016 was an example of such a development. It led to a surge in new subscriber additions for various distribution platforms. While the momentum slowed down as many state high courts issued a temporary stay order against digitization, we are still seeing higher subscriber additions from Phase III markets as compared to previous years."

"In addition, the deadline for Phase IV digitization is December 31, 2016, which we believe covers approximately 80 million television homes."

Financial Summary

(In INR million, unless otherwise indicated)

                                        Q4FY15  Q4FY16 % growth   FY15    FY16  % growth
    Key financial metrics
    Revenue from operations              6,253   7,715   23.4%   23,377  28,559    22.2%
    Subscription and activation revenue  5,834   7,056   20.9%   20,628  26,068    26.4%
    Adjusted EBITDA                      1,752   2,191   25.0%    6,092   8,013    31.5%
    Adjusted EBITDA margin (%)            28.0%   28.4%            26.1%   28.1%
    Net loss                              (757)   (212)  72.0%   (2,727)   (922)   66.2%
    Content cost (% of revenue)           38.4%   37.5%            36.2%   37.8%
    Key operating metrics
    Gross subscribers(million)           13.09   15.74   20.2%    13.09   15.74    20.2%
    Net subscribers (million)            10.18   11.86   16.5%    10.18   11.86    16.5%
    ARPU (INR)                             202     214    5.9%      196     207     5.6%
    Churn (%)                             0.85%   0.58%            0.80%   0.73%

During the year ended March 31, 2016, Videocon d2h achieved strong subscription and activation revenue growth of 26.4% to INR 26.07 billion as compared to INR 20.63 billion in fiscal 2015. Revenue from operations grew 22.2% year on year to INR 28.56 billion during the year.

Videocon d2h achieved Adjusted EBITDA of INR 8.01 billion in fiscal 2016 as compared to INR 6.09 billion in fiscal 2015, reporting a growth of 31.5%. Adjusted EBITDA margin expanded 200 basis points to 28.1% during the year. This resulted in a significant improvement in net loss, from INR 2,727 million in fiscal 2015 to INR 922 million in fiscal 2016.

The Company added 2.65 million gross subscribers and 1.68 million net subscribers during fiscal 2016. Net subscribers totaled 11.86 million as of March 31, 2016. Monthly churn came in at 0.73% for the year as compared to a monthly churn of 0.80% in fiscal 2015. Subscriber acquisition costs in the form of hardware subsidies were INR 1,776 per subscriber during the fourth quarter of fiscal 2016.

The company had term loans of INR 23.15 billion and total cash and short term investments of INR 7.21 billion as of March 31, 2016.

Conference call's dial in details

The results conference call time and details are provided below.

                     Call #1                             Call #2
    Date             May 25, 2016                        May 25, 2016

    Time             11:00 am India time                 6:30 pm India time
                     1:30pm HK time                      9:00pm HK time
                     6:30am UK time                      2:00pm UK time
                     1:30am NYC time                     9:00am NYC time

    Dial in details
    India            +91 22 6746 8376 / +91 22 3960 0752 +91 22 6746 8376 / +91 22 3960 0752
    Hong Kong        800 964 448                         800 964 448
    Singapore        800 101 2045                        800 101 2045
    USA              1866 746 2133 / +1 323 386 8721     1866 746 2133 / +1 323 386 8721
    UK               0808 101 1573 / +44 20347 85524     0808 101 1573 / +44 20347 85524
    Pin code         Not required                        Not required

    Playback details
               India +91 22 3065 2322 / +91 22 6181 3322 +91 22 3065 2322 / +91 22 6181 3322
               USA   1855 4360 715 / 1863 9490 105       1855 4360 715 / 1863 9490 105
    Playback ID      76076                               03597

Forward looking statements

This earnings release may contain forward-looking statements, as defined in the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995. In addition to statements which are forward-looking by reason of context, the words "may", "will", "should", "expects", "plans", "intends", "anticipates", "believes", "estimates", "predicts", "potential", or "continue" and similar expressions identify forward-looking statements. We caution you that reliance on any forward-looking statement involves risks and uncertainties that might cause actual results to differ materially from those expressed or implied by such statements. These and other factors are more fully discussed in the Videocon d2h's registration statement on Form F-4 filed with the SEC and available at http://www.sec.gov. All information provided in this announcement is as of the date hereof, unless the context otherwise requires. Other than as required by law, Videocon d2h does not undertake to update any forward-looking statements or other information in this announcement.

FY16 audited financial results are available on the SEC web site and company web site http://ir.videocond2h.com

1. We calculate EBITDA by calculating profit or loss after tax as increased by income tax expense, net finance costs, finance income, other income, depreciation, amortization and impairment and reduced by other income. Adjusted EBITDA is EBITDA adjusted for the recognition of fair value of the Employee Stock Option Plan 2014 recognized as an expense over the vesting period which amounted to INR 117.77 million for the fiscal year 2016 and INR 29.45 million for the fourth quarter of fiscal year 2016. We will recognize ESOP expenses in fiscal 2017 as well. Adjusted EBITDA presented in this earnings release, is a supplemental measure of performance and liquidity that is not required by or represented in accordance with the IFRS. Furthermore, Adjusted EBITDA is not a measure of financial performance or liquidity under IFRS and should not be considered as an alternative to profit after tax, operating income or other income or any other performance measures derived in accordance with the IFRS or as an alternative to cash flow from operating activities or as a measure of liquidity. In addition, Adjusted EBITDA is not a standardized term, hence direct comparison between companies using the same term may not be possible. Other companies may calculate Adjusted EBITDA differently from our Company, limiting their usefulness as comparative measures. We believe that Adjusted EBITDA helps identify underlying trends in our business that could otherwise be distorted by the effect of the expenses that are excluded calculating Adjusted EBITDA. We believe that Adjusted EBITDA enhances the overall understanding of our past performance and future prospects and allows for greater visibility with respect to key metrics used by our management in our financial and operational decision-making.

2. Net subscriber means subscribers authorized to receive DTH broadcasting services on account of payment of subscription charges or any entry offer at the time of initial connection, as well as subscribers who are temporarily disconnected due to non-payment of subscription charges for a period not exceeding 120 days

3. Highest net subscriber additions amongst satellite operators based on publicly available information and company estimates.

4. Gross subscriber means total registered subscribers.

5. Average Revenue Per User ("ARPU") is calculated by dividing our subscription and activation revenue by the average of our net subscribers for the period. Subscription and activation charges are considered on a gross basis without netting off the recharge margins or discounts provided to the distributors.

Investor relations contact:

Nupur Agarwal

Dana Diver

SOURCE Videocon d2h