Highlights of the call
- For the quarter ended December 2008, on consolidated basis, NTL reported 22% sequential dip in operating revenues at Rs 148.40 crore. OPM dipped 360bps at 20.9%. Other Income surged at Rs 9.97crore against Rs 0.16 crore in the sequential quarter with depreciation charge up 13% at Rs 19.95 crore. Tax for the quarter was up 45% at Rs 8.55 crore with effective tax rate of 40.8% up from 21.1% and the resultant PAT after minority interest was down 45% at Rs 12.43 crore.
- The management believes that the turmoil would impact the company for the next 2 quarters atleast.
- OMP to drive growth going forward with OMX impacted by slowdown in BFSI segment as most of its clients are from BFSI segment mostly credit card companies.
- The management believes that Internet spend would be maintained.
- The depreciation charge increased 13% on sequential basis on the back of capex in the Hong Kong server farm in FY08 and FY09. The management expects depreciation charge to be about Rs 20 crore per quarter.
- Other Income was up at Rs 9.97 crore on the back of revaluation of assets and liabilities of UK subsidiary.
- The effective tax rate was up at 40.8% on the back of higher other income. For FY10, the effective tax rate would be 17-18%.
- Capex for 9MFY09 was Rs 100 crore on server farms in UK and Hong Kong. Server farms are depreciated over the period of 4 years. In Hong Kong however, the capex can be expensed out in the same year.
- The contracts are generally long term with pricing re-negotiated on quarterly basis.
- None of the directors or promoters has pledged any shares.
- Cash in books is Rs 17 crore. Free cash flow generated for the quarter was Rs 35 crore.
Online Media Exchange (OMX)
- Online Media Exchange (OMX) segment reported revenues of Rs 88.84 crore down 38% sequentially contributing 60% of the revenues for the quarter with EBITDA margins of 7.3% down 700bps.
- The dip in revenues and margins was mainly on account of dip in volumes due to holding on of prices. The pricing in the industry is down.
- 30% of the revenues used to come from credit card companies and Banks, which is not there any longer.
- Going forward, OMX would see dip in revenues due to the ongoing recessionary environment.
Online Media Properties (OMP)
- Online Media Properties (OMP) segment reported revenues of Rs 59.56 crore up 30% sequentially contributing 40% of the revenues for the quarter with EBITDA margins of 46.7% down from 56.3% in the sequential quarter.
- The management expects 25-30% q-o-q growth in revenues in OMP segment.
- Of the revenues, 60% is from Globe7, 30% from Ziddu and 10% from others.
- Growth going forward would be from volume growth. The inventory monetized is about 30% currently.
- The Company has not booked any revenues from the Hong Kong WIFI deal with the Government. The revenues would accrue in FY10.