Tata Sky reports consolidated revenue of Rs 4,682.21 crore in FY21

The company posted a net profit of Rs 68.75 crore as against a net loss of Rs 234.1 crore

e4m by Javed Farooqui
Updated: Sep 3, 2021 8:38 AM
tata sky

Content distribution platform Tata Sky has seen a flat growth in consolidated revenue at Rs 4,682.21 crore for the fiscal ended 31st March 2021 as against Rs 4,680.88 crore in the previous fiscal. Total income saw a marginal decline at Rs 4,704.83 crore compared to Rs 4,722.72 crore a year ago.

According to financial data accessed by business intelligence platform Tofler, the revenue from the core DTH business was down by 1.2% at Rs 4,593.01 crore from Rs 4,648.83 crore. Revenue from the provisioning of broadband service was up 2.8x at Rs 89.2 crore from Rs 32.05 crore. Tata Sky Broadband, a subsidiary of Tata Sky, provides broadband services to customers across the country.

In terms of revenue break-up, subscription and service revenue stood at Rs. 3,919.99 crore compared to Rs. 3,903.33 crore. Activation and Installation Revenue came in at Rs. 308.60 crore, compared to Rs. 303.09 crore. Other Service Revenue was Rs. 453.25 crore, compared to Rs. 474.44 crore.

The company, which had 23.16 million active subscribers till 31st March, posted a net profit of Rs 68.75 crore as against a net loss of Rs 234.1 crore. Total expenses stood at Rs 4,578.26 as against Rs 4,611.2 crore.

With content cost becoming a pass-through in the new tariff regime, the biggest cost item for the DTH operator was licence fees. In FY21, the company paid Rs. 758.85 crore as licence fee, compared to Rs. 740.67 crore. The company incurred an expenditure of Rs. 153.67 crore on programming cost, which is a 59% growth over Rs. 96.90 crore in the previous fiscal. Installation cost remained flat at Rs. 257.44 crore compared to Rs. 261.46 crore. The company's broadband operational cost increased by 39% to Rs. 65.06 crore, compared to Rs. 46.97 crore.

In terms of related party transactions with Disney-owned Star India, the DTH operator's marketing income and other revenue from the broadcaster rose 30% to Rs 108.88 crore from Rs 83.57 crore in FY20. Further, Tata Sky paid Rs 968.83 crore to Star India as broadcaster share of maximum retail price (net of broadcast incentive) compared to Rs 938.94 crore in the previous fiscal.

Under the new tariff regime, subscription revenue from the DTH service is recognised net of broadcaster’s share of the maximum retail price as per the TRAI guidelines. Based on current regulatory changes, major components of DTH subscription-related revenue are Network Carriage Fees (NCF), subscription fees for broadcaster channels and marketing incentives.

Effective 1st April 2021, the company received provisional licence under the revised DTH guidelines subject to compliance towards certain conditions. The company had made an application to the Ministry of Information and Broadcasting (MIB) for granting a licence for 20 years.

Tata Sky's DTH licence was originally valid up to June 11, 2016. Post that, the company received several interim extensions for the validity of the DTH licence and the last one was granted for the period up to March 31, 2021. The MIB has notified revised DTH guidelines on December 30, 2020.

During the fiscal, the DTH operator received a demand of Rs. 1,542.41 crore including interest of Rs. 733.72 crore related to licence fees dues from the MIB vide letter dated December 24, 2020. The significant amount of demand pertains to licence fees on taxes.

Tata Sky has responded to the MIB contending that licence fees should not be levied on taxes, as this amount is collected from customers on behalf of the government and hence deposited with the government. It has submitted a request letter to MIB to exclude taxes from the computation of licence fees, for which a reply is awaited from the ministry. As per the legal opinion sought by the company, licence fees is not payable on taxes.

Tata Group owns a 60% stake in Tata Sky, while Walt Disney holds 30%. Baytree Investments (Mauritius), an affiliate of Temasek Capital, holds 10% of Tata Sky's equity shares. The company is planning to go public through an Initial Public Offering (IPO). Disney plans to exit Tata Sky, and it has identified an IPO as one of the avenues to offload its stake in the DTH company.

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