Ladies and gentlemen, welcome to the Q2 and H1 FY 2022 results conference call of GTPL Hathway, hosted by Emkay Global Financial Services. We have with us today Mr. Anirudhsinh Jadeja, Promoter and Managing Director, Mr. Rajan Gupta, Chairman and Non-Executive Director, Mr. Piyush Pankaj, Business Head, CATV and Chief Strategy Officer, and Mr. Anil Bothra, Chief Financial Officer. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions at the end of today's presentation. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Sanjeet Naik from Emkay Global Financial Services. Thank you, and over to you.
Thank you. Good evening, everyone. I would like to welcome the management and thank them for this opportunity. I shall now hand over the call to the management for their opening remarks. Over to you, sir.
Thank you, Sanjeet. Good evening, everyone. A warm welcome to all of you to the conference call of GTPL Hathway Limited to discuss the financial and operational performance of quarter 2 and H1 2022. We continue to deliver on key KPIs during H1 FY 2022. The highlights of H1 FY 2022 was robust subscriber addition and subscription revenue for our broadband business. The company added 100,000 net broadband subscriber in H1 FY 2022, taking the total broadband subscriber to 735,000 during H1 FY 2022. The GTPL's active CATV subscriber base grew by 3% YOY basis. The company's balance sheet remains strong as we are net debt-free company with the impressive ROCE and ROE of 33% and 20% respectively on an annualized basis.
With the economy getting back to normalcy led by aggressive vaccination drive, GTPL is geared to strengthen its presence in the existing and new markets. With that, I hand over to Piyush Pankaj, who can take you through the business and financial aspect of the company. Piyush.
Thank you, Mr. Jadeja. Good evening, everyone. As you are aware, GTPL Hathway is one of the few consistently profit-making cable TV and broadband company in India. In the last five years, our CATV paying subscriber base has grown sharply by 2x to 7.35 million. Our broadband subscriber base has grown by 3.6x to around 0.7 million. We are number one private wireline broadband player in Gujarat. We have been consistently generating free cash flow and achieved net debt-free status in FY 2021. GTPL has consistently rewarded its shareholders with regular dividends. Additionally, I'm happy to share with you that GTPL Hathway Limited has been accredited with the prestigious ISO certification for both CATV and broadband business. We have appointed Deloitte as the statutory auditors for GTPL Broadband, 100% subsidiary of listed entity.
Let me now share the performance highlights for H1 FY 2022. In the CATV segment, our active subscribers stood at 8.05 million as on September 30, 2021. GTPL's digital CATV services reach 1,000+ towns spread across 15 states in India. The company is expanding aggressively in Maharashtra, Andhra Pradesh, Telangana, Tamil Nadu, and the Northeast states. Of the 300 million+ households in India, only 210 million households, that is translating to 70% penetration, are connected with TV services. The CATV industry offers an underlying growth opportunity for an organized and seasoned player like GTPL Hathway. Our CATV business expansion will gain momentum with organic and inorganic growth in the coming quarters. The Indian wireline broadband sector is a sunrise industry with huge untapped growth potential. It accounts for meager 6% penetration of the total households in India.
Additionally, the appeal of high-speed unlimited data package offers an opportunity to connect homes with wireline broadband services. In the broadband segment, we added 330,000 new home pass in H1 FY 2022, taking the total home pass as on September 30, 2021 to 4.20 million. During the quarter, GTPL added 45,000 net broadband subscribers, taking the total net broadband subscribers as on September 30, 2021 to 735,000. The broadband ARPU for H1 FY 2022 grew by 22% YOY to INR 440 per month. GTPL looks forward to expanding its broadband business by leveraging its existing base of 10+ million CATV subscribers and attracting new broadband subscribers through business partners. Let us now move to our financial performance.
On our consolidated business excluding EPC contract, during quarter 2 FY 2022, GTPL's consolidated revenue grew by 18% YOY to INR 5,992 million. The CATV subscription revenue stood at INR 2,715 million. The broadband revenue for the quarter surged by 50% YOY to INR 1,006 million, led by healthy growth in subscriber base. On our consolidated business, including EPC contract, during quarter 2 FY 2022, GTPL's consolidated revenue grew by 4% YOY to INR 6,052 million. EBITDA for the quarter increased by 4% YOY to INR 1,448 million with a margin of 23.9%. PAT for the quarter stood at INR 433 million.
Our EPC contract during Q2 FY 2022 reported the revenue, EBITDA and profit before tax of INR 61 million, INR 4 million and INR 4 million respectively. On our standalone business, excluding EPC contract during Q2 FY 2022, the company's revenue grew by 11% YOY to INR 3,757 million. The company reported EBITDA of INR 794 million with an EBITDA margin of 21.1%. On our standalone business, including EPC contract, during Q2 FY 2022, the company's revenue stood at INR 3,818 million. EBITDA during the quarter stood at INR 798 million with an EBITDA margin of 20.9%. PAT during the quarter stood at INR 332 million. This is all from my side. Thank you everyone for your attention. We can now begin with the questions and answer session.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Richa Mehta from Aequitas Investment. Please go ahead.
Good evening, sir. This is Pratiksha here. My first question actually is for cable TV division. I think if you look at broadly last two years, our digital paying subscribers have remained, you know, pretty much range bound 7.25-7.5 million subscribers. How do we look at, you know, growth in this segment? And, what is the breakup of, like the incremental subscribers this time? How much of it would be commercial and how much of it would be retail?
Thanks, Pratiksha. Last one and a half years, if I talk about because of, as you know, the because of COVID-19 as the ground situation, it was not very healthy for all the operators, for the whole industry. As commercial subscribers were opting out of the cable for the services. They are coming back, going out. That's continuously happening. That's why we are adding in the home segment. Because of the commercial, you will see that the numbers are still flat in last one and a half years. You can say from March 2020 to date, the numbers are almost flat on that basis. We are hoping that as the situation has improved now, next two quarter is going to be good for FY 2022.
We look forward to the projections which we are giving that we are going to grow as we were growing before the pandemic. We are going to attain that situation again. This time we have added around net subscribers 50K. More subscriber base has come into the fold. That is mainly after August 15, when the market has started opening up. This is all last 40 days that we got around 50K subscriber base back. Some corporate subscribers are coming back, the trends which we are seeing. We are hopeful that as the festival season is going on and the hotels are opening, all the shops are getting opened. People are flocking, traveling, everything is happening.
We are seeing that corporate subscribers are coming back into the fold.
I think that, you know, next milestone that we had set for ourselves was about 8 million subscribers. How much time do we think, you know, what is our internal timeline that we might be able to achieve that?
We are looking forward that that will be achieved by second quarter of next year right now FY 2023. As we lost the first H1 in that. We wanted to do that through March 2022, but we lost first six months, and we have just grown by 50K on that. We are looking forward that in the next one year time, we are going to cross 8 million.
Okay. Sir, my next question is on the broadband front. How many home passes do we target to add this year? Like, what is our milestone that we set up for ourselves here on home pass front?
This H1, we have made around 330,000 new home passes. [uncertain] Rajan sir, do you want to highlight this?
We have mentioned in, you know, earlier calls as well, last 2 years because of the fiber project with GTPL taken, there's a huge amount of fiber which has been rolled all across Gujarat. Okay? While currently is being used for BharatNet project, but the fiber is available, and we have access to that. Okay. Which essentially means, we have pretty much access to every taluk level town in Gujarat. Okay?
Right.
Of course, last six months, as Piyush rightly mentioned, home pass was limited because of ground situation because of pandemic. Now with pandemic being over and ground access as well as fiber being available, and GTPL is still able to, at a very kind of, you know, economical product around INR 200-INR 450 we able to deliver 40%+ EBITDA in broadband. It makes a lot of sense for us to take this offering even to lower level towns and obviously within metros as well as keep on expanding. All efforts are happening to expand even home pass aggressively as we are able to get returns also on the same.
Okay, sir, if you could just give the break-up of receivables, segment-wise, like how much of our current receivables would be from broadcasters and how much for EPC?
Total receivables is INR 3,226 on that. Carriage is around INR 167 crores of INR 322 crores. EPC project is around INR 99 crores. Rest are others, which is there around INR 45 crores-INR 46 crores. The total is INR 322 crores.
Okay. Sir, last question, if you could give the CapEx for. Sorry, you were saying something?
Yeah, yeah, sure. Go ahead. Go ahead, please finish. Yeah.
No. CapEx for this quarter, segment-wise CapEx for this quarter and the guidance, if you want to change the full year guidance for CapEx.
Yeah. CapEx, which we did in H1, is total INR 162 crores we did. As I have given that, in quarter one, we have did around INR 82 crores. This quarter we did around INR 80 crores. Out of INR 80 crores, around INR 35 crore is in the CATV and rest around INR 45 crores is in broadband.
Sir, full year target would be?
Full-year target, we are still maintaining that it is going to be somewhere close to INR 400 crores.
Okay. Okay. Thank you, sir.
Thank you. The next question is from the line of Dixit Doshi from Whitestone Financial Advisors. Please go ahead.
Yeah, most of my questions are answered. Just, can you just repeat the receivable numbers? I listened, carriage was INR 167 crore and EPC is around INR 100 crore. Is that correct?
Yeah, that's right. EPC is INR 98 crores and yes, carriage is INR 167 crores.
And so what-
Carriage and placement and market.
What comprise of the other segment?
O&M is there, plus other vendors are there. Other are like advertisements, small advertisements are there and all comprises of other revenues.
Okay. Nothing from MSO, right? It's 100% prepaid, right?
Yeah. It's 100% prepaid.
Okay. In EPC project, how much more revenue we need is going to come or it's complete and now only O&M will come?
Yes, the EPC project is almost completed. I don't think the EPC project, but O&M will continue as it is.
O&M will be yearly how much?
Yearly O&M is close to around INR 57 crore.
INR 57 crore yearly. Okay. Can you just elaborate slightly on our new set-top box which we were planning to launch?
You're talking about Hybrid Box?
Yeah, yeah.
Yeah. Hybrid Box we did the soft launch and around 1,500 boxes are in the market where the-
Sampling.
All type of samplings are happening on the packages also, on the technical side also, everything. We are planning to do the hard launch somewhere by October end or November start. That's the plan right now. Current plan is this. We haven't did the-
Majorly, this festival Dhamaka will going to launch this.
Sorry.
This festival Dhamaka.
Means-
Okay.
around Diwali.
Okay, just last question from my side. You know, pre-COVID, we used to mention that, once everything will be settled, we might look at increasing our share from the MSO. Is there any thought process over there or we are still maintaining that INR 120 ARPU?
No, that thought process is there, yes, 100%.
Will be looking to increase or maybe it's still bit far?
No, we are looking to increase, but we are waiting for this quarter, most probably by quarter four, the price changes will happen.
Okay. Let's say over next two, three years, whenever we can, you know, take our share to a respectable level which the competitors do, till what level it can go up from INR 120?
Up to 160.
Not in short term, but let's say over two, three years.
160, 170.
Yeah. It will be somewhere around jump by around 25%. Okay, 25%. Okay, that's it from my side. Thanks.
Thank you. The next question is from the line of Harsh Sharda from Centrum PMS. Please go ahead.
Yeah. Hi, sir. Thank you for the opportunity. Sir, so you recently, an earlier participant asked about BharatNet project, you said that you still have access to it. Sir, if you could briefly talk a bit more about such projects, what kind of advantage these projects give you? And are there any more such projects in the pipeline where you're bidding, looking to bid?
About BharatNet, basically, majorly, this project is, it's called a GFGNL under 100% ownership with BBNL network. Pure Gujarat kariban phase one and phase two all put together close to around 8,000 Gram Panchayats which are already connected and close to around 34,000 kilometer fiber is already laid. Best part
As I understand, these projects are very important for our penetration into a state and establishing our position.
Yes.
What kind of margins do we target when we look at such projects? Margins are not very important and getting that position is
In GFGNL, as we have given in our financials also, their margin was 14%, and for which, 7% was coming in our books, 7% we are giving to our partner. That goes in the margin on which we have to play around that.
Okay, sir. Sir, thank you so much for the opportunity.
Thank you. The next question is from the line of Shivam Saxena from ICICI Bank. Please go ahead.
Sir, I want to understand what would be the ARPU trajectory going forward. Are you seeing any upgrades on the existing recharge plans? What is the guidance for the ARPU next year or coming quarter?
For what? Cable TV or broadband?
For broadband. Both, or you can specify both. It's really helpful.
Rajan. Rajan, now got it clearly. No, broadband ARPUs are very stable. Frankly, that is the design. Okay? We have been maintaining that. This whole equation is working very fine for us. Like many of you speak about competition, which is where we have been saying, you know, this whole ARPU of between INR 400-INR 500 and average around INR 450, okay, that's essentially the ARPU we have decided for ourself for near future. Okay? Because even with this kind of ARPU, you have seen the EBITDA margins, they are quite good, more than 40%. You know, currently we are into that whole space of acquiring more and more consumer, going deeper into our home pass penetration. Considering that, ARPUs for broadband will remain broadly stable. Okay?
Of course, we have the future with us in terms of upgrading these consumers to, you know, higher speed packages, et cetera. Okay? Once they are there with us, and once their needs are also evolving over a period of time. From next couple of quarters perspective, the broadband ARPUs will remain fairly stable. Anubhai, over to you for cable, please. Cable is also same, Rajan, as linear TV. Cable as we said earlier, that we are looking forward to increase our margins and we will do that in somewhere in quarter four.
Any update on the new tariff order?
New tariff order, yes. It's already done. Regulations, broadcaster declared. As we are evaluating updates NTO 1.0 DPO overall industry boost up. I'm sure those NTO 1.0 experience learning NTO 2.0 cultivate and this is as I'm assuming it same format. Still we are evaluating with a lot of other broadcasters, price and or RIO upload. Exactly quarter three quarter four shape up. Regulatory options consultations based on this, especially for NTO 2.0 process. I'm sure quarter clarity.
Has it been implemented?
Implement December, close. I think December, January.
Okay. It is okayed from the court, right? It is no more subsidized, right?
No, the matter is subsidized. The court gave broadcasters interim relief. Technically, yes, broadcasters implement. The matter is still subsidized.
As per my understanding, the fee would reduce. The channel fee would reduce, so it will impact your margins also. Your share will also go down.
We have to wait and see. Fees is not reduced or anything, but still we have to wait because broadcasters price upload regulatory side related consultations still under process, DPOs price declaration and small broadcasters price upload. You will have to wait.
The revision will be on the downward side only na, as per the NTO 2.0, I think.
NTO 1.0 DPO formula. DPO overall industry boost up. I'm sure same formula, same NTO 2.0 industry boost up.
Okay. Got it. Thank you.
Thank you. Participants who wish to ask a question may press star and 1. The next question is from the line of Anil from Centrum Wealth. Please go ahead.
Good evening, gentlemen. First of all, congratulations on a great set of numbers. I had a few questions. On a broader basis, how does cable TV get impacted due to OTT? Could it be that the slowdown that we are seeing is due to the onslaught of OTT? If you can sort of throw some light that is it only due to the closure of hotels and commercial establishments due to COVID-19, which is causing or it could be due to OTT. That is part one of my question. I have a part two, which is now there is this Airtel is also coming out with a satellite broadband program. And Elon Musk, I mean that whatever Starlink is also coming.
Apart from that, Jio is there and a lot of other people are entering wireline broadband aggressively. How does GTPL stand in comparison with all these different kind of competitors? These are big people with a lot of strong balance sheets. What has been your experience and what is your outlook? One question is on cable, other question is on wireline broadband.
Yeah. OTT impact on cable side. Yes, you can see metros and all, you can see 2%-3% impact is happening on that on 100%. Mainly it is because of the ground and all what we have seen till date that, due to pandemic and all corporate subscribers are not there. But yes, OTT is there, which is going to be on the higher segment side. But yeah, we are countering it with our hybrid boxes and bringing the OTT platforms to our platforms also. All those efforts are going on to counter that. Till date, we have not seen any major impact because of OTT and others. Rajan says, you can highlight on the CATV side also and wireline satellite side sir.
Yes, sir. I'll take it out from here. Let's divide the question in two parts. First is OTT, second broadband. Okay. OTT is very easy to understand. We have to relate it to any other consumer upgradation which is happening through any other category. Okay? For sake of simplicity, let's talk about pizza as a category. Okay? We have seen in metros, various metros, and now even in mini metros, lot of people upgrading from pizzas to, say, gourmet pizzas, okay? Parallelly, the people who are not eating pizzas are eating pizzas, and people who are not eating anything, they are eating something now. That's the whole consumer pyramid on which India growth story, India consumer growth story, India consumption story is getting built up. Okay. This whole OTT as a phenomenon has been there for some time.
As Piyush mentioned, certain percentage of people do upgrade to OTT, which is the case with the many other industries, as I just mentioned. That gets compensated by growth at the bottom of the pyramid. There's a Citi report also which is available on the whole pay TV sector, which can be read by all investors. That clearly gives a lot of data in terms of what kind of growth is happening at the bottom of the pyramid, how a lot of new users are coming with the growth of TV industry, pay TV industry, and growth of rural income, et cetera, et cetera. What we have observed is during pandemic time, the growth at the bottom of pyramid has slowed down.
While the whatever marginal migration to OTT is there, that continues. Okay. Finally, of course, the whole commercial point, which Piyush spoke about, that's of course valid, that lot of commercial establishment, a lot of paying guest accommodation, hotels, you know, hospitals, you know, lot of such establishment, they kind of didn't renew their TV services. We are hopeful with the pandemic, as we come out of pandemic and overall economy is taking the right shape, we are hopeful that bottom of pyramid growth story will start again, which was the case till around 6-8 quarters back, okay? Which will more than compensate for our, you know, migration to OTT, whatever little is happening. Of course, parallelly the management has to execute their market share plans for which a lot of work is happening. Okay.
Now we move to broadband. Broadband, I answered you the last time. I'll probably repeat the same answer only in the last quarter conference call. Let's talk about two players. One, we spoke about wireline broadband and second, satellite broadband. Now, satellite broadband is very easy. You know, last time I spoke at length, in fact, about it. Okay. World over, our experience has been satellite broadband is more used for areas where wireline is not possible or wireline is not viable. Okay? So essentially, if you have a, for example, just as a placeholder, you have a kind of farmhouse, say, in 100 kilometers from Bombay, where there is no wireline facility because not viable for any wireline players to kind of take their fiber there, because there are not too many farmhouse in that area. Okay.
In that space, satellite broadband typically has been used quite successfully in U.S. and some other developed countries. Essentially, the one-time cost of establishing the signal is quite high. Consumer has to pay for consumer premises equipment, which are in thousands of dollars. After that, there are monthly charges which are significantly higher than the wireline broadband ARPU. Satellite broadband is essentially for areas where, in general, you know, reach of wireline broadband is not very feasible. With the kind of consumption which is happening on wireline broadband in India, specifically GTPL, which is now greater than 200 GB per consumer per month, and with the kind of ARPU, which is 400-450 INR ARPU.
Absolutely, there's no way any satellite broadband has any kind of, you know, opportunity to meet that. Essentially, we will see in India also, many more players will enter in satellite broadband. As I rightly mentioned, from the perspective of reaching those areas which cannot be reached by wireline broadband. Second point, competition within wireline broadband. Okay. Gujarat, we have spoken many times. Gujarat, GTPL has the best understanding of how the market works on the ground. They have the access to all the homes passed because of dominant share in the, you know, cable TV industry. Okay. Now competition has been there for some time. I mean, there's no new competition coming. Whatever the existing competition is there, they have been aggressive for quite some time now.
I mean, I think last three years, this industry has seen one of the highest level of competition because of which obviously industry also has grown, specifically in non-metros. Okay. In spite of that, this has been the best experience for GTPL. The experience has been as more players have come and worked on the market, okay, that has helped the industry growth. That helped the consumer realize that, you know, you know, there is a case for wireline broadband, which is where GTPL has seen this growth. GTPL ARPU versus speed GB value equation for consumer, that remains the best in the industry. Nobody today is offering this kind of product at a value of INR 400 or INR 450 or INR 500. Okay? If you can compare, I mean, offline, you guys can take details from Piyush.
He can share with you. Okay. Approximately, GTPL speed and GB equation is twice or double as compared to any of the nearest competition. Okay. So I think management is quite confident of keeping this growth trajectory on broadband.
Okay. Thank you. Can I put in a follow-on question, please?
Yeah. Feel good.
Yeah. Okay. So far you were only in Gujarat, you know, as far as wireline broadband is concerned. Now, these hybrid boxes are coming out and you'll be able to offer all over the country wherever your cable operations are there, the hybrid box can go over there. Can you offer any comments as to what would be the price-value equation? Because this one box will be giving you both cable as well as broadband. As a combo product, what is the price value offering that you have compared to the competition? Are you know, how cheap are you? That is one part. Second, once you roll this out, what kind of margin changes can one expect at the company as a whole? Two parts.
There were two questions that I asked.
No, no, we understand. There seems to be some lack of understanding with the product, which, you know, we keep on talking about it, this whole Hybrid Box. First thing to clarify, this doesn't give any broadband. In fact, it uses broadband. Okay? Whether we lock it with GTPL broadband or not, that's a management decision, which I'm sure they'll take it over a period of time. Okay? The product is not giving any broadband. Okay? It's a set-top box which can take Wi-Fi input, technically from any service provider, but for us it's possible to lock it to GTPL network. Okay? It doesn't give any broadband. It's a normal cable TV set-top, which also has ability to give OTT by taking Wi-Fi input from any broadband service provider. Okay?
Based on the business strategy for a particular state, GTPL actually can take a call whether to lock it to GTPL broadband or not. Okay? Now, in terms of GTPL broadband, we clarified earlier also, it has been a management decision by twice that next few quarters, next three, four quarters or even little more, we'll focus primarily on Gujarat as we have a huge amount of home passes still are available, and we would like to take a pole position in Gujarat itself. Okay? You know, because that's where a lot of potential is still available. Okay? That's where we are a dominant leader in cable. Okay?
While technically, you know, we can obviously go to many other states, but I think the required, we have to balance out in terms of investment, return on investment and areas where we feel we can take a pole position. Next 3, 4 quarters we'll focus on Gujarat only in terms of, you know, taking a pole position there. I already clarified your answer of the box.
The last part regarding margin, if you could, elaborate.
Anil, for margin and pricing on the boxes, I will take you one to one. As I said that we have just did the soft launch. Hard launch is going to be around Diwali. Wait for that or we can have one to one on that.
Okay. Thank you very much.
Thank you. A reminder to the participants, to ask a question, please press star and one. The next question is from the line of Shivam Saxena from ICICI Bank. Please go ahead.
Thank you for taking my question again. So, I just want to understand how much is the competition between broadband and cable TV sub segment? Are not these two segments competing with each other in the metro, especially in these metro areas?
See, the competition is because cable TV is more of the content and broadband is more of connectivity. The competition is not between broadband and cable TV. The competition can be on between entertainment to entertainment, can be on connectivity to connectivity. If you talk about that you are getting OTT through broadband, and that is the competition with the cable, that's a different thing. There is no competition between broadband.
Yeah, I'm saying that only. Yeah.
Yeah. We have already given that Rajan has explained that in the hierarchy pyramids it is.
Mm-hmm, mm-hmm.
Yeah. That's that. I think we have answered that.
How are you seeing your subscriber? Basically, are the cable TV subscribers giving up their connection if they are getting good broadband? What is your customer profile? How-
We consider ourselves as a pipe. As we said that through Hybrid Box we are also introducing OTT, and in the future we are going to introduce OTT as a distribution also. We consider ourselves as a pipe. We are right now giving the broadcasting channels and taking it to the houses. We'll take any services, meaning OTT services also to the houses. We look ourselves strategically as a pipe, which is reaching to the customer house.
Okay. Thank you.
Thank you. Before we take the next question, a reminder to the participants, anyone who wishes to ask a question may press star and one. The next question is from the line of Gautami Desai from Chanakya Capital. Please go ahead.
Yeah. I mean, this is a broader question, maybe for Anubhai. Anubhai, by doing this Hybrid Box, aren't we encouraging cord-cutting? By what I mean to say is that, like Piyush just said, for OTT, you know, we are just a pipe, right? Yeah, I agree that you are a pipe, but for OTT we are not paid. Whereas for cable TV, we have a sizable cable TV population for which we are paid. I just want to understand that. And when I'm saying that are we encouraging cord-cutting by Hybrid Box, what I mean is that there could be people like, you know, who are, you know, kind of lazy or ignorant or something, and they're just watching cable TV because it's there.
Once they have hybrid and they learn to see OTT, does cable TV provide, you know, anything different from OTT that you feel that, you know, even if the customer has OTT, he will go for cable TV? Is there anything special with cable TV?
Piyush, I will take this one, and then Anubhav can add to that. Hello?
Hello?
Hello. Piyush, am I audible? Yeah. I will take it and then Anubhav can add to that. Yeah. Go ahead. Bhakti, first some technical clarification. The hybrid box, as I mentioned, the controls are in the hands of GTPL Hathway Limited or any other service provider for that matter, okay? The way the box typically is configured, you know, the box will anyway not work if the cable connection is not active. The world over itself, the cable hybrid boxes, whichever cable service provider has, you know, kind of, deployed these boxes, of course the first priority is, you know, cable TV.
Boxes can be configured, and they're already configured in such a way that if the cable service is not active, the box anyway will not work, okay? This whole debate of OTT versus cable TV, look, let's understand first, consumer needs are evolving, and that is not something which I think is healthy for us to intervene. Consumer needs are evolving and they will evolve in a particular way. Earlier, consumer needs were limited to the family watching TV together. Now, consumer needs are really, you know, kind of, they have multiple needs. There are times people want to watch OTT on their single screen device. There are times people want to enjoy, you know, Bella Ciao or sitting there in the living room with their near and dear.
There are times they want to enjoy live cricket TV, you know, without any interruption, without the app kind of collapsing on a live TV, you know, without any fear of app actually collapsing, or anything like that. Consumer needs are now quite, kind of, different. It's not only one need. They have multiple needs. Idea of hybrid box always has been to ensure that we at GTPL Hathway as a company, we are putting a foot in the door in whichever segment consumer needs are there, okay? Through the single box, we can offer consumers large screen experience in OTT, even if they don't have smart TV. Even if smart TV is there, smart TV doesn't offer all the apps, okay?
Parallelly, by having this box there, we know much more about consumer viewing habits because the kind of analytics we have on hybrid boxes know much, much better, okay? We have a broadband opportunity once that box is there because we know which broadband player is there on that box, if we allow other broadband players. So we have ability to cross-sell our GTPL Hathway broadband, okay? And we of course get a pie of the OTT revenue as well, okay? Because we can't really change consumer needs. Parallelly making sure the box works only if the cable has been recharged, okay? You know, that obviously control is in our hand. Anirudhsinh Jadeja, feel free to add. I just thought some technical points I at least mention. Agree, agree, Rajan.
Basically this Hybrid Box is non-smart TV will convert into the smart TV. Just like you said, even today, people who are buying new smart TVs, there also pre-integrated OTT applications are limited. Here, in all the markets we have, whether it is a national level, international level or regional level, all the OTT applications that are there, all of them are pre-integrated. All the old TV models we have, whether it is a black and white, whether it is any CRT TV televisions or non-smart televisions, in all those televisions, along with cable, they will be able to watch OTT as well. Yes, mandatory cable will be there. Without cable, they will not get OTT.
All the OTT providers that are there in the market today, we are somehow or the other, with them also, according to the revenue sharing model, we are understanding. From that revenue sharing, the DPO plus the cable operator will also get the benefit of it. By default, all these OTT players, whoever is watching OTT from the GTPL hybrid boxes, so mandatory, cable TV will be mandatory there. Somewhere or the other, the indirect dent that is going to happen will also stop.
Okay. Brilliant. Thank you very much, Rajan Gupta bhai, Anirudhsinh Jadeja.
Thank you.
Thank you.
Thank you.
Thank you. The next question is from the line of Ankur Periwal from Axis Capital. Please go ahead.
Yeah. Hi, sir. Thanks for the opportunity. You know, to start with the first question on the broadband side. Your presentation does mention 4.2 million home pass and roughly 750,000 active subscribers. Can you help us understand how has this been broken up in terms of our existing subscriber base, existing cable subscriber base across Gujarat, Maharashtra, West Bengal, etc., and Uttar Pradesh, wherein we are probably offering only broadband and no cable there.
Yeah, good. Out of 735,000 subscribers, around 95%, 93-point-something% is in Gujarat. We are mainly focused in Gujarat right now and increasing our sub base on that. Apart from that, we have six cities where we are operating Pune, Nagpur, Jaipur, Varanasi, Patna and Hyderabad. We are growing there. The focus is mainly in Gujarat right now.
Fair enough. Of this, let's say 90% of the 700,000. Let's say rounding off numbers at 5.7 million subscribers. How many of these will be the combo offers which we will be giving, which is basically we are offering cable as well as broadband to the last mile consumer.
[Foreign language] Abhi combo offer ab hum jaake roll out karne jaa rahe hai. Abhi tak to hum broadband alag se broadband chal raha tha. Basically kaafi issues jo AGR related the wo sab kaafi sort out ho chuke. Now we are going forward completely, whether it is a broadband, OTT or cable TV all put together. We will also launch this combo offer.
Sir, will it be right to say that out of, let's say, 7.5 million paying subscribers and maybe a large part of these subscribers coming out of Gujarat, that will be still an incremental opportunity for you on the broadband side to ramp up?
Yes. In Gujarat. Yes.
Okay, fair enough. Okay. Sir, a second question. You know, I'm referring to your slide number 27, which is basically the P&L breakup that, you know, we have shared in terms of, you know, different segments. Not looking at Q-on-Q numbers, but, you know, largely speaking, carriage will be more or less, you know, flowing down to EBITDA. You know, in earlier comment, Rajan did mention, you know, broadband business being the 40% EBITDA margin there. If I do a backward math out of INR 560 crore EBITDA, is it the case that ex of carriage or placement, you know, the cable, the core cable business is EBITDA negative right now at INR 120 per month ARPU net worth?
Ankur, in last call also, whenever we have to calculate the gross margin on cable TV, we have to consider subscription CATV, free channel cost and your marketing, which is what you are paying to the broadcaster. What you are getting from the broadcaster has to be netted out. That's why you have to see the business after netting out the channel cost and placement revenue.
Okay, what you're suggesting is out of, let's say, INR 550 crore minus maybe INR 110 odd crore of EBITDA from broadband. One should look at that as a cable business on the balance, you know, INR 2,150 minus the INR 600 crore, sorry, INR 280 crore of broadband business.
Yes. [Foreign language: agar aap content cost minus marketing placement aur ye sab net off karenge, toh] derived content cost will be around coming around INR 51 or INR 52 against INR 130 cable TV ARPU. Yes.
Sure. Sir, jab apan when we were, you know, talking of 20%-25% increase in ARPU, which is, you know, let's say INR 120 going to maybe a INR 150, INR 160 run rate, the absolute EBITDA on a, let's say gross profit on a per subscriber basis. Do you see that number increasing or probably large part of this delta will also be resulting in a higher content cost?
Yeah, yeah. This is going to be accretive to EBITDA. Directly accretive to EBITDA. Any increase in ARPU.
Okay. Okay, fair enough, sir. That's it from my side. Thanks a lot.
Thank you. A reminder to the participants to ask a question, please press star and one. The next question is from the line of Miten Lathia from Fractal Capital. Please go ahead.
Good afternoon. If we look at the pricing that has been announced by most of the broadcasters, you know, it appears that they are sort of pulling out their playbook and wanting to price it separately. With this sort of pricing, you know, how do we look at our ability to be able to maintain our stacks the way they are today? What should be the implication for the gross margin that we incur?
[Foreign Language] Miten ji, actually aap pricing ka discussion jo NTO 2.0 ke baare mein aap bata rahe hai na?
Mm-hmm.
[Foreign language] Haan. Abhi kaafi aur broadcasters ne price declare karna baaki hai. Humne past mein bhi humne pehle bola hua tha ki jo NTO 2.0 mein bhi usi formula mein ye NTO 1.0 ke time pe pricing ka jo discussion aaya tha, us time pe bhi yahi discussion hua tha ki down the line jo NTO 1.0 ne overall industry ko kahi na kahi ARPU se leke DPO margin se leke jo benefit kiya hua hai. I'm sure NTO 2.0 bhi usi kyunki abhi do saal ka NTO 1.0 ka overall industry ne kaafi experience liya hua hai. I'm sure past ke saare experience ko log ke aage jaake kahi na kahi overall industry ko ye benefit hi karega.
That answers your question, Mr. Miten Lathia?
Yeah. No, no. I had just one clarification that I was taking. Should we expect that the customer will end up paying more even after NTO 2.0?
Raja, [Foreign language].
Nithin, as you know, kind of course you understand, and Anup bhai also saying, so there are a lot of moving parts over the next 60-90 days, right, for this implementation, okay? As an MSO service provider, of course, our task is to make sure as smooth a rollout as possible, both with the consumer and trade. We are gonna take help of all broadcasters and all stakeholders, and of course, all the governing bodies and regulatory bodies, et cetera. Okay? There are a lot of moving parts. The endeavor is to make sure it should be, implementation should be very smooth and there shouldn't be any shock for any of the stakeholders in system.
We are gonna seek support of kind of, as I mentioned earlier, all of the stakeholders who are there with us, so that its implementation is smooth. I think everybody wants same. As and when we have more specific plan, you know, of course we'll come back to all of you and update. Great. That's it from my end. Thank you.
Thank you.
Thank you. As there are no further questions from the participants, I now hand the conference over to the management for closing comments.
Thanks, everyone, for joining the GTPL quarter two FY 2022 earnings calls. We look forward next quarter to talk to you for quarter three results FY 2022. Thanks a lot. Be safe, be healthy.
Thank you.
Thank you. On behalf of Emkay Global Financial Services, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.