Dish TV’s Rs 1,000 crore rights issue is critical for the survival of the DTH company that needs funds to upgrade technology and replace old set-top boxes with the new-age smart connected boxes otherwise its subscriber base would shrink, a top company official said.
Dish TV is facing competition from the rapid growth of new distribution platforms like OTT and increased penetration of the free DTH platform of public broadcaster Doordarshan, and needs funds to upgrade and convert all its existing STB into smart boxes offering multiple services, the official, who wished not to be named, said.
Terming it as “reality”, the official said rivals such as TataSky and Airtel have already taken a march over it by providing android operated new age STB, which enables subscribers to watch both live TV and OTT content (when connected to the internet) on one device, without switching between multiple HDMI ports.
“To change all the existing boxes … requires a high subsidy,” said the top Dish TV official adding otherwise our platform would start shrinking. We have to spend on the brand building also.
Yes Bank Ltd, which holds 25.63 per cent equity of Dish TV, is opposing the right issues.
Earlier in a notice, Yes Bank had said the Rs 1,000 crore right issue, is solely to dilute the shareholding of the bank, which is the single largest shareholder of the company.
Dish TV is already witnessing churn of the subscribers in the last 1.5 years due to the pandemic and low capital expenditure on subscriber acquisition due to huge bank loan repayments in the last 15 months, the official added.
Fundraising is in the interest of the company, its shareholders, lenders and other stakeholders including its employees as if it fails, then its capacity will get adversely impacted because of the decrease in the subscriber base, the official added.
On October 13, the board of Dish TV had rejected the requisition notice by Yes Bank, to hold an extraordinary general meeting (EGM) to reconstitute the board of the Direct-to-Home player on the technical ground as it requires certain prior approvals.
In the requisition notice dated September 21, 2021, Yes Bank Ltd had sought to remove its Managing Director Jawahar Goel along with four other directors Rashmi Aggarwal, Bhagwan Das Narang, Shankar Aggarwal and Ashok Kurien.
Yes Bank, has also sent the name of seven people – two Non-Executive Directors and five Independent Directors – to be nominated on the board of the company.
Earlier Yes Bank had sent notice to Dish TV, for reconstitution of the board in the AGM of the company, which was scheduled to be held on September 27, 2021.
Over the names proposed by Yes Bank, Dish TV officials said for running a DTH business requires skill and knowledge and the persons recommended by Yes Bank, proposed to be nominated on the board of Dish TV are noted people and from a variety of backgrounds but no one has a prior experience to run this business.
It will destabilise our business, the official said adding Yes Bank would not be able to run this sophisticated industry.
The official was also surprised over Yes Bank’s stand as it was one of the most vocal supporters of the company in the lenders’ meet.
Dish TV, which had a debt of around Rs 3,300 crore two years back has paid most of the amount and around Rs 525 crore, mostly from two lenders – RBL Bank and Axis Bank – are left to be paid back.
“We have never defaulted to any payment of the bank. We have paid a huge amount back to the banks in the last two-and-a-half years, around Rs 2,650 crore,” he said.
Moreover, he also added that the existing Banking Regulation Act 1949 put a certain embargo on Yes Bank to operate the DTH business, the official said.
There are media reports, suggesting that Yes Bank may move before the National Company Law Tribunal, challenging the rejection of its notice by the board of Dish TV for convening EGM.
On June 21, the board of Dish TV had approved to raise Rs 1,000 crore through a rights issue of equity shares at a price of Rs 10 for each fully paid-up equity share (including a premium of Rs 9 per fully paid-up equity share) to eligible equity shareholders of the Company.
For the financial year ended on March 31, 2021, Dish TV reported a revenue of Rs 1,603.96 crore and a loss of Rs 677.75 crore. It has a base of 16 million net active subscribers.
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