Q1 21/22

Jul 19, 2021

Ladies and gentlemen, good day, and welcome to the Q1 FY 2020 earnings conference call of GTPL Hathway, hosted by Emkay Global Financial Services Limited. We have with us today Mr. Anirudhsinh Jadeja, Chairman 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 after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then 0 on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Naval Seth of Emkay Global. Thank you, and over to you, sir. 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, Naval. Good evening, everyone. A warm welcome to all of you to the conference call of GTPL Hathway Limited to discuss financial and operational performance of Quarter One 2022. GTPL Hathway continued to deliver on key KPIs during Quarter One 2022. The highlights of the quarter was robust subscriber addition and subscription revenue for broadband business, strong profitability, and debt repayment. GTPL has further reduced its debt by INR 168 million in Quarter One 2022. GTPL will continue to march forward on its stated strategic roadmap by coming up with interesting and new products and services, enhancing customer experience, strengthening its digital infrastructure and capability, and escalating its footprint in the existing and new market. With that, I hand over to Mr. Piyush Pankaj, who can take you through the business and financial aspect of the company. Thank you, Mr. Jadeja. Good evening, everyone. I hope all of you are safe and healthy. GTPL Hathway is one of the few consistently profit-making cable TV and broadband company in India. Our business model is quite robust and can explore multiple growth opportunity that this sector has the potential to offer. In the last five years, our CATV subscriber base has grown sharply by 2x to 7.3 million. Additionally, our broadband subscriber base has mirrored and a significant growth of 3.6x to reach 0.7 million. We have been consistently generating healthy free cash flow and have managed to reduce our gross debt by INR 420 crore in the last five years, and have returned the money to shareholders in the form of regular dividends. I'm happy to share with you that GTPL Hathway Limited has been recognized as one of India's top 500 companies by Dun & Bradstreet, ranked 401 on turnover in the listing published for 2021. Additionally, during Q1 FY 2022, we have launched GTPL interactive virtual assistant, GIVA, a WhatsApp-based chatbot for 24/7 customer support for CATV and broadband businesses. Let me now share the performance highlights for the quarter. As on June 30, 2021, our active TV subscribers stood at 8 million. GTPL's digital CATV services now reaches 1,000+ towns spread across 15 states in India. The company is expanding aggressively in Maharashtra, Andhra Pradesh, Telangana, Tamil Nadu, and the northern states. GTPL CATV platform services own and operate 48 channels across over six genres. 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, as against 80% in Japan, 70% in Euro zone, and 50%, 55% in China. This represents a huge opportunity for growth for us. In the broadband segment, we added 230,000 new home pass in Quarter 1 FY 2022, taking the total home pass as on June 30, 2021, to 4.10 million. During the quarter, GTPL added 55,000 net broadband subscribers, taking the total net broadband subscribers as on June 30, 2022, to 690,000. The broadband ARPU for Quarter 1 FY 2022 grew by 4% 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 me now move to our financial performance. On our consolidated business, excluding EPC contract, during quarter one FY 2022, GTPL's consolidated revenue grew by 22% YOY to INR 5,843 million. The CATV subscription revenue stood at INR 2,641 million. The broadband revenue for the quarter grew by 74% YOY to INR 918 million, led by healthy subscriber additions. EBITDA for the quarter increased by 8% YOY to INR 1,362 million with a margin of 23.3%. On our consolidated business, including EPC contract, during quarter one FY 2022, GTPL's consolidated revenue grew by 22% to INR 6,106 million. EBITDA for the quarter increased by 7% YOY to INR 1,380 million with a margin of 22.6%. PAT for the quarter surged by 16% YOY at INR 475 million. The finance cost during the quarter was lower by 78% YOY and 62% QOQ. Our EPC contract during quarter one FY 2022 reported the revenue, EBITDA, and profit before tax of INR 263 million, INR 18 million, and INR 18 million respectively. On our standalone business, excluding EPC contract, during quarter one FY 2022, the company's revenue grew by 14% YOY to INR 3,740 million. The company reported EBITDA of INR 778 million with an EBITDA margin of 20.8%. On our standalone business, including EPC contract, during quarter one FY 2022, the company's revenue surged by 14% YOY to INR 4,003 million. EBITDA stood at INR 796 million with an EBITDA margin of 19.9%. PAT during the quarter stood at INR 305 million. This is all from my side. Thank you everyone for your attention. We can now begin with the questions and answer sessions. 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 Pratiksha Daktari from Ukritaj. Please go ahead. Thank you for the opportunity, sir. Okay, my first question is, if you could tell us for cable TV, what was the ARPU in this quarter? If you could explain the subscriber decline that we had and how do we see things currently? Hi, Pratiksha. Hi. This quarter, the ARPU remained same. If you do the calculation, you will get it at approximately INR 122 point something. The ARPU is flat this quarter. This quarter we have witnessed as the year opens and the COVID has gone into its highest numbers in April and May. It was a difficult time for everyone, for every business. We faced that in cable also. We tried to maintain our subscriber bases. The main hit has come from the corporate subscribers, which we were seeing that in the last quarter of last year. The corporate subscribers started coming back to our fold, and in April and May, we have seen that they have gone away again. In June, some of them have returned back. We are hopeful that as the situation will improve, we will get back our corporate subscriber base, and again we will bounce back. That's why you have seen that there is 200,000 subscriber base down. Some effect has come because of cyclone, which has hit the Gujarat and Maharashtra, and there is a Yaas cyclone which has hit the West Bengal market. Some of the subscriber base which is still to come from because of these cyclones. We are expecting that in the quarter 2, as the situation will improve, we will get back these subscribers who are still not back after the cyclone and plus the corporate subscribers. Okay. On non-corporate side, retail side, did we have any gross additions for this quarter? Yeah. If I talk about, we lost around INR 350 thousand, INR 375 thousand in the corporate side. The retail side has gone up by around INR 150 thousand-INR 175 thousand between that, and the net figure is INR 200 thousand. Okay. Understood. This time we've seen pay channel cost as a % to our cable TV revenues have gone up substantially. Is there any change in our commercial arrangement with the broadcasters, or why? Diksha, you have to see pay channel cost in connection with our placement and marketing revenues. If you see the increase in placement and marketing and increase in the pay channel cost is similar, there is no impact on the gross margin due to the pay channel. Okay. Understood. On the broadband front, we've seen some decent growth on home pass additions this time. Do we expect the trajectory to continue? Yeah, we are trying to continue this trajectory. This quarter was difficult for us on the ground, but still we managed to do that 30K home passes. We are going to continue that. On the subscriber additions front, do we see the growth rate increasing, or how do we look at subscriber addition in broadband for this year, the remaining months? As in the last call also, we have given that we were going to add between 50K-60K every quarter. This quarter we added 55K, so we are hopeful that the projections on which we are working or we have given, we are going to continue on that basis. Okay. Understood. Any update on the litigation front? Which litigation you're talking about? DOT. Oh, okay. No, there is no update on the AGR side. Court was not into the order. No hearing has happened on those. When is our hearing scheduled, sir, right now? Rajan, sir, do you have the update on this? There is no update as of now. I think you can offline update them, as and when the developments happen. Yes. Okay. Sir, on the EPC, I think, can we assume that now all the revenue recognition for the EPC contract, excluding obviously the O&M's revenue recognition and expenses is done with? Almost 98% is done. Okay. All right. Now sir, a couple of data points. If you could share receivable position as on June and the CapEx plan for the remaining of the year. Receivables position is ₹352 crores. If you see quarter four, we were at around ₹383 crores. The receivable has come down by ₹30 crores. It is at ₹352 crores around on this quarter. On CapEx, this quarter we did ₹82 crores of CapEx, which ₹49 crore of CapEx is in the broadband and ₹33 crore of CapEx is in the CATV. Okay. Sir, how much of the receivables would be from broadcasters? How much would be for EPC? Broadcaster is around ₹165 crores and EPC is around ₹120 crores. Are we facing any issues in receivables for the EPC contract? No. We have not facing any issues. If you see last quarter, we have given that we have INR 226 crore of EPC project receivables. Now it has reduced to INR 120 crores. Okay. Sir, CapEx guidance remains the same for the full year? CapEx, the projections which we have given that we are going to do between INR 350-400 crores, that is going to remain same right now. Okay. All right, sir. Thank you, sir. Thank you. The next question is on the line of Dixit Doshi from Whitestone Financial Advisors. Please go ahead. Yeah, thanks for the opportunity. Some of my questions have been answered. Just couple of things. Firstly, if I see the cable TV segment-wise result on a consolidated basis, year-over-year, the revenue has gone up. Even quarter-over-quarter it has gone up. Cable TV PBT has not gone up in that proportion. In fact, quarter-over-quarter, it has come down by almost 5% or 10%. What led to that? Is there any one-off or any cost increase? PBT, if you talk about at that time, you can see that depreciation is going up as we are doing more and more investment. One of the reasons is whatever increase we are taking in our revenues and all, that is coming down with the depreciation. One factor is the depreciation, as you see. PBT has increased. If I compare it with the last year, Quarter 1 FY 2021, if you talk about, that is from INR 575 crores, that has gone to INR 45 crores. I will just give you the figure of the PBT. On the consolidated basis, if you see Quarter 1 FY 2021 ex-EPC, the PBT was at INR 56 crores. If you compare it with the Quarter 1 FY 2022 ex-EPC. No. At INR 732 crores. Yeah. Predominantly this increase was due to the broadband business. I'm talking just about the cable TV business. If I see, there was almost 15%-17% jump in the cable TV revenue year-over-year. PBT in cable TV business has gone up hardly anything, like couple of INR crore. In fact, quarter-on-quarter it has come down, cable TV PBT. You have to see in a different way, because the subscription of CATV is flat from last year. It was at INR 183 crore last year. This quarter also it was around INR 183 crore. Still, your PBT has increased by around INR 6 crore, from INR 35 crore to INR 42 crore from the quarter to YOY basis. The contribution on the PBT is happening. Yeah, the revenue side you talked about, it has gone from INR 327 to INR 374, but cost side also has gone up from INR 248 to INR 396. You have to see the business in the basis of clubbing placement and pay channel together and see the net margin increase on that. Pure on subscription, it is flat from last year, but on PBT, we are getting around INR 6 crore of the PBT. PBT is increasing. Still, the revenue is same. Okay. In terms of cable TV subscribers, this year obviously due to the pandemic in Q1 it has come down. Over, let's say, next 2 years or 3 years, what kind of net cable TV subscriber addition we can expect annualized? Our planning is obviously coming 3 years, almost close to around 3 million. Each year we wanted to plan to roll out 1 million. Yes, because of this pandemic, it's issues. Our projection is year-on-year, it's 1 million every year. Okay. Last question from my side is, how much we did spend on this, appointing Boman Irani and this new campaign launch. How much we would have extra spend during this quarter? It's 0.5% of the revenue which has gone into that. Okay. Any update on hybrid box launch? Yeah. Hybrid box, we are launching somewhere in August right now. Hybrid box is already with us. It has got delayed because of the pandemic and because the shipment has got delayed. We got the shipment in mid of July now, and we are planning to launch in August. Everything is complete and the testing is going on. Okay. That's it from my side. Thank you. Thank you. The next question is from the line of Saptarshee Chatterjee from Centrum PMS. Please go ahead. Yeah, sir. Thank you for the opportunity and congratulations on a good quarter amidst the pandemic second wave. Sir, my question is on the broadband side. Most of the questions have been answered. On the broadband side, the ARPU has been INR 440, slightly around INR 5 lower than last quarter. Whereas, we have expected trend to be higher because of people are upgrading their plans. If you can give some color on that front. Rajan, sir. No, broadband, I think as far as ARPUs are concerned, they have been pretty stable. I think more than ARPU, we have been anyway indicating that there's no plan to ARPU increase. ARPUs will remain broadly speaking stable, and quarter to quarter, they'll keep on increasing INR 5 or decreasing INR 5 based on the pack mix change. I think a bigger picture which we have to see on broadband is GTPL is in a very sweet spot, which we have been updating you for last many quarters. Okay? In a state where only BSNL is a major competition and nobody has this kind of network. The amount of investment we have done in network in terms of upgradation from MEN to GPON and the kind of service improvement which we could exhibit, both in terms of speed quality and overall network quality. Okay? We are kind of in a sweet spot. That's why you are seeing this kind of results quarter-on-quarter in terms of increase in revenue, subscriber numbers, EBITDAs. Without any disruption because of any other competition actually. A, because ARPUs are low, and B, EBITDA levels are very healthy. You would have seen the EBITDA levels, upwards of 40% EBITDA with this kind of ARPU. Essentially, that means that GTPL can keep on spending more and more within Gujarat itself. Okay? It's a very large state, at a very affordable price point of INR 400-500, and keep on growing for many, many quarters to come. I think that's a better way to look at it. Quarter-on-quarter, yes, there will be INR 5 variation here and there in the ARPU. There is no change in plans or there is no drop in pricing which has happened. Sure, sir. In the cable TV, like we have said that we are expecting around 1 million subscriber increase every year. Are we talking about expanding in market share out of these 170 million paying subscribers, right? From whom we are expecting to gain market shares, and majorly in which states, if we can classify? We are expanding very fast in Maharashtra, Andhra, Telangana, Tamil Nadu, and Northeast. We will add more states going forward. This will come from majorly our which competitors, maybe, in the DTH or mostly our MSOs only? It is going to be mix of that. As in earlier calls, we have said that we have started the programs and through marketing, through direct selling, everything, to tap the DTH market and bring back them to the table. That is already going on in the strategy. Plus, there is going to be a strategy of consolidating the market going forward in the cable TV. Sure, sir. Very helpful. Is it possible to give any color on the hybrid plans, like what kind of ARPUs, margins, anything on that front? Anything? We are going to launch very soon. It is hardly now 15 to 20 days, two to three weeks. I think it will be colored in here. I will say that wait for two to three weeks more. Sure, sir. Thank you. I'll come back in the queue. Thank you. The next question is from the line of Kush Gangar from Care PMS. Please go ahead. Hi. Most of my questions have been answered. With the current AGR case going on, recent, I think yesterday, there was some hearing regarding some mathematical errors. Does that impact us? If you can just highlight on that. No, that is for telecom, not for this. Okay. It will not impact us. Okay. Sure. Okay. That's it. Thank you. Thank you. The next question is from the line of Nikhil Jain from Jaylaxmi International. Please go ahead. Yeah, sure. Thank you. Thanks for the opportunity. Just one question, actually. Fundamentally, our revenues from, if you look at YOY nature, our revenues have increased by more than 20%. However, our PBT has increased by only 7%. What could be the major reason for that? That was one. Second, is there any kind of indication or guidance from the management for the rest of the year? Let's say, what kind of EBITDA margins we can manage. Whatever we are having now, would that be sustained or there can be a potentially increase in the change given the benefit of operating leverage? These are my two questions. Thank you. You're right that our total income has increased by 22% YOY, the expenditure has increased by 28% YOY also. Thus, EBITDA has just increased by 8% YOY from INR 126 crore. It has gone up to INR 136 crore. That's why you are seeing that in the PBT, it has increased by around 30%, from INR 56 crore to INR 73 crore YOY. These are the figures, and it's a consistent one, as you see that EBITDA growth, which is happening YOY, is between 8-10%. As we are reducing our finance cost substantially, we are getting the gain in the PBT. That is reflecting here that PBT has gone up by 30% YOY on that. Right. No, the point was that, see, the finance cost is a limit, right? We have reduced the debt significantly. We can obviously looking to reduce it further, and it will go down further. The point was that if the EBITDA growth is going to be 8%-10% in a business which can be potentially, let's say, having good operating leverage. I just wanted to understand, is there any specific reason? Are there activities that we are doing which are, let's say, taking or reducing our EBITDA growth as compared to the top line? That's what. Because finance cost will have a Yeah. Yeah. That's right. I will not go to PBT here. I will say that we are in the expanding mode, as you know, in the broadband business also and in the cable business also. When you are expanding, then you have to do some extra expenses, which you have to take out, establish the market. You have to enter into the new market, establish the whole thing. Your cost increases at that point of time for, you can say, till the substantial number you gain, so that your per sub cost goes down on those markets. That is where we have to go, and we are going aggressive in our new markets and bringing down because there is a fixed cost. As the number of subscribers will grow, you will get the more contribution towards your EBITDA. That's what's the way we have to go, and we are doing them that way. As far as concern about the EBITDA margin, we are at around 23% EBITDA margin, and this will be maintained. Okay. All right. Thank you, sir. Thank you. The next question is from the line of Neeraj Sawhney from RBL Equity. Please go ahead. Hello. Can you hear me? Yeah. Please. Can you hear us? I can hear you. Yeah. The question was basically that given that we are generating very good cash flow and we are now net cash, are you looking actively at any acquisitions, especially on the cable side of the business, since you said you are looking at consolidation in that market? Yes, we are working on it, in organic way or inorganic way. We will see. We have the strategy to increase our sub-base inorganically and organically. Yes, we are working on the acquisitions also. Hello. Yeah, I'm done. Thank you. Thank you. The next question is from the line of Dixit Doshi from Whitestone Financial Advisors. Please go ahead. Yeah. Thanks for the opportunity again. Just 1 question. 1 of the competitor, NXTDIGITAL, they have this HITS model, Heading to Satellite model. Recently, they have got the approval from the ministry that they can give the services to others as well. They were mentioning that it reduces the connectivity cost of the MSO, where there is a density of the population is very low. They are targeting in the interior. How does this can impact our business? We are also trying to expand by acquiring more and more MSOs. Basically, we are not in HITS model, yes, as you said, expansion, going forward, the fiber and lease cost and bandwidth cost are getting cheaper, the lease cost is better than the HITS cost down the line. That's why we are not going with this HITS. Yes, now everywhere, even though under this Digital India BharatNet project and all everywhere, fiber availability is there, all lease circuits are there. Everywhere is now rural part is also we covered everywhere. Rajan sir. Yeah, Adobhai, I just want to add to it. Ladies and gentlemen, first let's understand HITS is not a new technology. It is not as if first year HITS has come. It has been existing for many years, and in spite of that, GTPL is the only MSO with a double HITS base, okay, as far as cable TV is concerned. Secondly, as a part of our business vision, obviously, we have this whole convergence as a part of the plan. With the kind of fiber we have in Gujarat and in many other states, specifically in Gujarat, obviously it makes sense to keep on expanding broadband home passes and make sure consumer get both the services. Obviously, future is convergence. While we keep on evaluating every technology, and there is no permanent no to any technology, but as of now, we are fairly confident we will keep on repeating the past market share gains and then focus will be more on convergence and keep on taking broadband to more and more homes in Gujarat and other states as well. Yes, HITS is a one-way technology. Okay. That's it from me. Thank you. Ladies and gentlemen, to ask a question, you may please press star 1. The next question is from the line of Tarun Kumar from OSC. Please go ahead. Yeah, hi. Can you hear me? Yeah, Tarun. Hi. I actually wanted to ask about the satellite broadband that is coming in as a new technology. Recently, there have been some articles about the same, and maybe Airtel is trying to do something in this space. Just wanted to have your understanding about this technology and the potential that it has and maybe if we can tap into it. Rajan sir. Again, satellite broadband, whatever information we have currently available in public domain or otherwise, it's for a very niche kind of area. It's for the areas where the regular fiber broadband is not easily reachable. Because the kind of economics today fiber broadband has, as I keep on repeating, GTPL is able to give in a sub INR 500 pricing per month, without any investment from consumer. Consumer has to literally invest INR 0, and consumer can pay INR 500 and get 100 Mbps unlimited broadband. As per our evaluation, no technology currently beats that. It's not possible through any other technology. Satellite broadband is a niche. The kind of pilots also whichever happened across the world, they're happening more for niche areas where fiber connectivity is not easily reachable and giving consumers access to high-speed broadband in those areas. We are quite certain that the kind of value for money, this whole fiber broadband or FTTx technology offers, that is not replicable currently by any technology. Okay. Basically, right now you're saying that what we have, the fiber broadband, on a cost basis is continuing to be superior than even the satellite broadband that they might be able to launch at the price difference, right? Both. It's not. One is the recurring charges per month, second is the device charges. If you study, I don't want to waste time of everybody on this call. That's a separate topic, actually. We can spend a couple of hours understanding that. The kind of consumer premises equipment satellite broadband needs. Okay? Okay. It's not equipment, just like the HITS technology earlier they mentioned. Okay? Here, we are giving every day thousands of connections without any installation charges or deposit, anything from consumer. Consumer can pay and get INR 500, 100 Mbps. That's simply not possible. There you have to put a lot of equipment at the consumer place, and there are a lot of 1-time charges, et cetera. Basically, the technology is not meant for mass markets like India or whatever. There will be a lot of use cases which will come, but that will be for very niche areas. Our focus in GTPL is obviously in the mass market. Correct. Whatever markets we are targeting, it's going to be unlikely that satellite broadband competes with us, right? Absolutely. Okay. Thank you, sir. Thank you. The next question is from the line of Nikhil Jain from Jaylaxmi International. Please go ahead. Yeah. Thank you. Thank you for the opportunity again. A couple of questions. One was, let's say the organization is owned 37% by Hathway, which in turn is owned by Reliance, right? Is there any kind of, let's say, arrangement that we have for, let's say, any kind of potential mutual collaboration that is there between us and Reliance, or we operate as completely different entities altogether and compete in the same markets, and is there any benefit that is coming in from the shareholding or there is none? That was question one. Yeah. GTPL right now is going ahead on their own strategy and own brand, and we are privileged that Jio is our partner, Hathway is our partner so well. The benefits you can talk about, the best part is all the benefits GTPL is getting, whether it is vendor negotiations. Content side. joint strategy, whether it is content side, whether it is knowledge sharing and all. Yet GTPL is working as independent on their own brand and own strategy. There is understanding on the ground that we are, as a group company, we are going to complement each other in the market, and we maintain that. Does that mean that, let's say, is there some kind of arrangement on the ground that, okay, we will not be competing, or we will be competing as aggressively as we compete, let's say, with Airtel or let's say DTH TV subscribers and other people? No. We are competing in the market, but we are not disturbing each other. If we have to do some work on the ground, we will do in the joint strategy against the third player, and we will help each other to grow. That is the understanding, and that is the market understanding on which we are working. Okay, sir. Thank you. That was the first question. Second, I just wanted to understand what are the, let's say, and if it can be sent offline also, that is fine. What are the broadband customers and cable TV customers that we have on a state-by-state basis? Because I was just looking at it, and we are now present both with cable TV and broadband in, let's say, around 8 states, and then another 5 or 6 states where we are present either through broadband or through cable TV, which let's say is we are covering, let's say, the most popular 13, 14 states of the country. Right? I just wanted to understand that has management thought that what is the strategy of expansion for the management? Do we want to go into more number of states, or do we want to consolidate our presence? Do we want to be as strong number one, number two in many other states, or we want to open more states, let's say? Some strategy, some thoughts. One of the strategy of going into the market, GTPL always believe that whether it is cable or whether it is broadband, it's the way of density market business. Whichever city or whichever area you will go, you have to be the dense subscriber base on those areas. See, in the cable, you can go on the strategy basis of the whole state, you can go on the strategy basis on five cities, or you can go on the strategy of having 10 districts. Whichever way you go, you should have the density, and you should be number one, number two player in those areas or those districts in those state on those levels. State comes in the last. You have to understand that when you are entering into a new state, first you have to go for 2, 3 districts, and you will make yourself number 1 on those districts first. Then you expand in other districts, and slowly you become number 1, number 2 in the whole state. Cable or broadband is a local business, you can say. It's not like global. Why? You have created one infrastructure and it is whole for the state. No. You have to incrementally create your infrastructures and go for the business. Yes, this is sure that wherever GTPL is going, we go in the way that we should be number one, number two, in the short period, and we start making money on those markets. All right. That's the right thing, actually. That is what I also believe, because from there, when I look at the number of states, and these are very popular and very big states, I get a feeling that, okay, are we spreading ourselves too thin? Thank you for the clarification. Can I assume then that when we are going in Andhra, or we are going in Telangana, or in Maharashtra, or any new state, we are focusing on a district by district and trying to make money and trying to consolidate ourselves in that before expanding to the entire state, right? Yes, that's right. I'm giving that every time the statement, that we are expanding very aggressively in Maharashtra, Telangana, Andhra, Tamil Nadu, Northeast, because we have still to cover lot of districts on those states. We are expanding aggressively on those markets. If you talk about Gujarat, we are already in all those districts in Gujarat. Already present except one or two, which we are going to expand small here. If we talk about Maharashtra, Telangana, Andhra, Tamil Nadu, Northeast, still lot of districts are there where we can expand, and that's why the statement is that we are aggressively expanding in these markets. Right. Thank you. Just one last thing, maybe just pardon me if it is not so correct. The point is that should we not actually go one state by one state? Should we actually go consecutively or together in five states or six states, or maybe little more actually, right? This is a strategic question. I think we should take it one to one. It depends that what company is taking this strategy and how. This is a strategic question, Shashi. Right, sir. Thank you. Thank you. Participants you may press star and one to ask a question. The next question is from the line of Ridhima Chandak from Roha Asset Managers. Please go ahead. Thank you for the opportunity, sir. My question is on the CATV side. Basically in this quarter, what leads to the reduction in the CATV EBIT margins on a QOQ and a YOY basis both, even after increasing revenue? Yes. If you talk about just the CATV, we are down by around INR 1 crore at the EBITDA level from the YOY basis. That is mainly because the subscription CATV is a bit down. The second is your activation revenue. The deferred revenue of activation is reducing, and that's why if you see there are INR 6 crore of impact on the activation revenue, but in EBITDA, the impact is just INR 1 crore. Okay. Is there any pressure on the pricing also? Nothing like that? No pressure on the pricing. As I stated that the ARPU is maintained, and whenever we get the situation improves in the market, then we are going to increase the ARPU. Okay. Thank you so much. Thank you. Participants, please press star and one to ask a question now. Ladies and gentlemen, you may press star and one. Okay. The next question is from the line of Nitesh Laneya from Fractal Capital. Please go ahead. Good afternoon, sir. Nitesh here. Just wanted to understand, in terms of the incremental home pass that we are doing now, where is the proportion of overlap on our cable business? I think you answered this last time, but are we deviating on that at all or no? No, we are not deviating. Our stand is as it is clear from the beginning, that for doing the better ROI, we are riding on our cable businesses for giving it the broadband services. We are expanding wherever our cable business is there, that will be in the broadband also. You don't see that changing for the next 3 years, at least? You'll keep on doing an overlap with your cable business? Yes, we are going to do those scope of overlap. We are going to come with the broadband through partners. That strategy is already there. Already pilot is over. We are going to launch that. We are going to do through partners on our network only, on our cable network only. Effectively, no greenfield area for broadband is being targeted. Greenfield area is together we are targeting for the cable and broadband. If new building is coming, new areas are getting developed. It's the same state or same district or same town. Yes. Okay. You may be in the process of also expanding your geographical territory of your cable business. That's what you're trying to say? That's right. That already we are doing. We are doing it in our current states also and our new states also. Fair. If one were to understand the incremental profitability of broadband by looking at the numbers, we can get a fair sense. If we were to just simply look at incremental EBITDA margins for a new subscriber added on the existing home pass, that would be at what number, sir? If you talk about on EBITDA, because it's not CapEx is different. On EBITDA, if you see, it's around 42%, which we are getting straightaway incremental in our EBITDA. That would be on the whole base per se, right? On an incremental basis, it will be higher than 40%? Yeah. On incremental basis, if you talk about that I am adding subscriber base, where already I have subscriber base, then Vinay is talking about we have created the home pass. Piyush, in existing markets, essentially gross margin. Yes. Gentleman, if your question is in existing home passes, where already, for example, 15% penetration is there, and if we add another 3% penetration, how much will be the addition to the margin? Because fixed cost is already there in those markets. It will be basically gross margin is what will go to the profit line. Obviously, below EBITDA, whatever lines are there, depreciation, et cetera, that will come. Gross margin is what will get added to EBITDA. Gross margin is typically, in most of the markets, more than 70%. I mean, finally, above gross margin, you have cost of only bandwidth and money which you pay to channel partners in terms of the distributor commission or partner commission. 70 is the number. Got it. Understood. Yeah. Thank you. That answers it. Thank you. Thanks, Mudil. Thank you. Before we move to the next question, a reminder to the participants, anyone who wishes to ask a question, please press star and 1 now. Good. The next question is from the line of Dhruv Shah from Ambika Financial. Please go ahead. Yeah. Hi, team. Good evening. Sir, I have 2 questions linked to the one thing. How many of our 4.1 home passes would be coming from Gujarat? Home pass is around 90%, 92% is from Gujarat. Okay. Understood. The reason why I'm asking that question, sir, is because apart from Gujarat, your plans for broadband doesn't seem to be anywhere competing other likes, right? Because if you see your likes, your offering in Hyderabad, you are charging 100 Mbps for almost close to INR 850, whereas Jio is charging only INR 699. Apart from Gujarat, why is your offering really not competitive? Basically, majorly our focus on B2C is only on Gujarat. Other states, our plan to go ahead with our business partners, like our joint venture partners or our LCO partners and all. Hyderabad market, B2C subscribers are less over there. Still, we are working with our business partners, and surely we will replicate what we are doing within Gujarat. That will happen. Even if you work with your business partners, but we don't have any say in the kind of offering we have, because if you see in Nagpur, our maximum offering is 50 Mbps, and that too, it's a 15-month period and INR 480 per month, whereas. Piyush, I'll take this question. Yeah. Gentleman, some of our colleagues here in this call itself spoke about focus, right? Right. If you see last 12 quarters, what we have been talking about here in this call, that we are limited capital. We like to use that capital in areas where we are getting maximum ROI. Okay? Around 12 quarters back, we identified Gujarat as the market where we have dominant leadership in cable, where we have excellent trade relationships, where we saw a sweet spot that apart from BSNL, no other large telco is able to do any substantial wireline broadband business. Okay? We all agreed that right from during IPO times, that this business makes only money if you are number one or number two, and below a particular volume threshold in a particular market. Okay? Which is where we said Gujarat has a huge amount of home passes available. Okay? The way our unit economics work, even at an average ARPU of INR 450, we make greater than 40% EBITDA. Okay? To offer 100 Mbps, you have to first upgrade the network from MEN to GPON FTTH. Every quarter, like some of us spoke about additional depreciation, et cetera, because every quarter we have been spending money on upgrading network as well as creating new home passes in Gujarat market. We haven't even exhausted that. Okay? You are right, one can go to Nagpur, one can go to Hyderabad. Hyderabad already has three players with a very developed market where no net adds at market level are getting added. Hyderabad already has more than 11 lakh, 12 lakh wireline broadband consumers who are getting at a very affordable price, 100 Mbps speed. Okay. Identifying through our channel partners some gaps. For example, say outskirts Hyderabad or say Warangal, where quality broadband service is not available and over a period we can develop that franchise as Piyush is rightly mentioning. Frankly, our prime focus will be on markets where we can be number one player, okay, and where we are the first entrant. That's where you can make even at a INR 450 price point, greater than 40% EBITDA. While some work here or there will keep on happening, but I think as a strategy itself, the focus is on Gujarat at least for next few quarters, where there is still a lot of meat is there. We can go anywhere, but it's more like management decided to kind of focus on areas where first we can be market leader, we can be the one who creates the market, and then we can be a dominant leader there. Right. Apart from Gujarat, sir, if you can just elaborate on that. Which is the other state which you are looking to expand apart from Gujarat? Right now, major focus is in Gujarat. We are present in Patna, Varanasi, Jaipur, Nagpur, Pune, and Hyderabad. These are the small operations. We are going to concentrate on these markets and develop these markets as the CapEx and all those things permit us. Yeah, these are the six focus markets right now, where we have entered, and we are going to go aggressively on that with the time. Okay. Sir, my next question is there any inorganic opportunity in the broadband space? You have alluded to the fact that you are looking for inorganic opportunity in cable TV. Are there any opportunity on the broadband space also which you'll be looking at? Okay. Sir. Thank you. Thank you so much. Thank you. Participants, you may press star and one to ask a question now. As there are no further questions, I would now like to hand the conference over to the management for closing comments. Thanks everyone for joining the earnings call of FY 2022, quarter one of GTPL Hathway Limited. Be safe and healthy. We will meet again on the next quarter earnings call. Thanks a lot. Thank you. On behalf of Emkay Global Financial Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.