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Aksh Optifibre: Capitalising on its IPTV offering

February 25, 2011
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Known for its internet protocol television (IPTV) offerings in India, Aksh Optifibre is currently in expansion mode. The Indian small cap company, which started operations as an optic fibre manufacturer, is eyeing telecom markets like Dubai and Sri Lanka to extend its IPTV services.

In July 2010, the company announced the incorporation of an international subsidiary with the aim of expanding overseas. Former managing director Dr Kailash S. Choudhari was transferred abroad to manage the company’s overseas business. Aksh expects to start its services in Dubai within the next six months and is currently in the process of procuring the necessary approvals. It is also in talks with service providers like Etisalat and Du for a potential tie-up, but a final agreement is yet to be worked out.

Aksh’s board recently approved a proposal to raise funds up to $333 million for its global expansion and other business requirements. These funds will be raised through various options like foreign currency convertible bonds (FCCBs), American depository receipts/global depository receipts (ADRs/GDRs), preferential allotment and qualified institutional placement.

Background 

Incorporated in 1986, Aksh Optifibre started operations as a manufacturer of a wide range of optic fibre cables (OFCs) and fibre-reinforced plastic (FRP) rods. The company set up two OFC manufacturing plants at Bhiwadi and Jaitpura, and an FRP manufacturing plant at Ringus, Rajasthan. Over the years, Aksh emerged as a key exporter to the US, Europe, Saudi Arabia, Iran, Oman, Japan and Southeast Asia, with export earnings accounting for nearly 25 per cent of its total sales.

The company has been providing television and telephony services over the internet on a revenue-sharing basis with Mahanagar Telephone Nigam Limited (MTNL) and Bharat Sanchar Nigam Limited (BSNL).

In late 2009, the company transferred its manufacturing facilities for fibre, OFC, ERP rods and other telecom cables to its wholly owned subsidiary Aksh Technologies Limited. Hiving off its manufacturing operations into a subsidiary has allowed the company to focus more strongly on its services (television and telephony) division.

Recent developments 

IPTV clearly remains the main thrust area for the company. Its IPTV service, iControl, launched in partnership with MTNL, has a subscriber base of 30,000 and an ARPU of Rs 200. The venture, which has entailed an investment of Rs 1.5 billion so far, offers over 125 channels at competitive rates. The iControl service also offers a shopping platform called iControl Mall, a video-on-demand (VoD) library, interactive advertising, games and parental controls. The company entered into a similar partnership with BSNL wherein it offers iControl over BSNL’s fixed line networks.

Aksh has extensive plans of scaling up this business segment. It is planning to invest Rs 2.5 billion over the next two years to strengthen its IPTV network in India.

In October 2010, the company further advanced its IPTV offering by introducing new time shifting features for a number of popular pay channels like Sony, SAB and Discovery. The new feature enables users to pause, rewind and fast-push programmes from the past three days, with the time shifting controlled from a back-end server.

In a related development, the company collaborated with Alcatel-Lucent to launch India’s first 3G-driven mobile TV service with MPEG4 picture quality for the state-owned operator MTNL. The service leverages on Alcatel-Lucent’s mobile streaming server to provide an enhanced user experience with bandwidth adaptation and video optimisation capabilities.

In collaboration with BSNL, Aksh also launched the country’s first fibre-to-the-home (FTTH) broadband network service in Jaipur, providing high quality video and data services. The company intends to replicate this model across the country and provide triple-play services, namely, voice, IPTV and data, in rural, semi-urban and urban areas across India.

The past year has also seen the company engage in many fund-raising initiatives. In August 2010, it issued up to 11,550,000 equity shares with a floor price of Rs 14.50 per equity share, aggregating to Rs 225.23 million via the qualified institutional placement route. In September 2010, the company successfully closed its GDR issue of $25 million, allocating 58,287,500 equity shares underlying 1,165,750 GDRs.

On the financial front though, the going has been tough for the company. In  two consecutive quarters of 2010, Aksh incurred significant losses. For the quarter ended September 2010, the company reported a net loss of Rs 39.4 million. Its total income also declined from Rs 430 million for the quarter ended September 2009 to Rs 23 million for the quarter ended September 2010. It also reported losses (before interest and tax) of Rs 64.4 million for its services segment (IPTV and voice over internet protocol). However, the company expects the services business to break even by March 2011.

The way forward 

Though the company has a first-mover advantage in the IPTV business, it will have to compete with operators such as Bharti Airtel and Reliance Communications, which have strong brands to back their services. DTH services also compete with the company’s IPTV offering in terms of subscribers. Lack of awareness about IPTV is another major hindrance. 

However, the company has been taking initiatives to attract and retain customers. It recently signed a multi-year VoD deal with Disney-ABC International Television to offer Disney movies on its iControl platform. Prior to this, Aksh had signed a deal with Sony Pictures, to bring Hollywood content to iControl subscribers. Moreover, with global expansions in the pipeline, the future seems full of opportunities and Aksh is eager to capitalise on them.

 
 
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