Change is afoot at Delhi-based Aksh Optifibre. From hiving off its manufacturing operations to betting big on the IPTV segment, the company spent the better part of 2009 preparing to meet competition and challenging market conditions.
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 has 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 to Mahanagar Telephone Nigam Limited (MTNL) and Bharat Sanchar Nigam Limited (BSNL).
In late 2009, the company decided to transfer 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 will allow the company to focus more strongly on its services (television and telephony) division.
The thrust is clearly on leveraging Aksh’s IPTV network. Its IPTV service, iControl, launched in partnership with MTNL, has received a warm user response and has already garnered 30,000 subscribers 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 packages include a refundable deposit of Rs 1,999 and the user can avail of three plans priced at Rs 199, Rs 249 and Rs 299. The service is currently available in Delhi, Mumbai, Haryana, Punjab, Himachal Pradesh, Jammu & Kashmir, Rajasthan and Uttar Pradesh.
The company has tied up with various channel partners and plans to strengthen its IPTV operations in Delhi. According to Lieutenant General V. Dhir, president of corporate initiatives at Aksh, this will be accompanied by an aggressive 360 degree marketing campaign. Aksh expects to add 100,000 IPTV customers and reach ARPUs of Rs 300 by end-March 2011.
The company expects to appoint close to 60 franchisees to provide its IPTV services in 22 cities. Initially, it will appoint up to eight franchisees each in Delhi and Mumbai for offering the services to MTNL’s broadband users. It will also appoint two franchisees each in 20 cities to cater to BSNL’s broadband users. To meet these targets, Aksh plans to invest another Rs 1.5 billion in its IPTV business over the next three years.
The company also hopes to extend IPTV services to foreign shores, starting with Sri Lanka. Dhir claims that the company is already the largest IPTV player in Southeast Asia and the launch of IPTV services in Sri Lanka will not only expand its subscriber base but also help the company reach the break-even point. Besides, Aksh is reportedly at advanced stages of talks with an African country for launching IPTV services there.
Back home, the company, in collaboration with BSNL, has launched the country’s first fibre-to-the-home service in Jaipur to provide high quality video and data services. The multi-play service offers high definition content and IPTV services on a 100 Mbps internet connection. It is expected to offer 2.5 Gbps upload and download speeds within a distance of 20 km.
According to Dr Kailash S. Choudhari, managing director, Aksh Optifibre, while BSNL will be the main service provider, Aksh will provide the content for the prepaid service and collect the revenues, which will be shared with BSNL. The revenue sharing, he said, would depend on the capital expenditure.
For the quarter ended March 2009, the company reported a net loss of Rs 130.2 million. Its net sales dropped by 26.2 per cent from Rs 480.2 million in the previous quarter to Rs 434.7 million. It also reported losses (before interest and tax) of Rs 67.32 million for its services segment (IPTV and voice over internet protocol). However, revenues from the segment rose by 8 per cent from Rs 8.01 million in March 2008 to Rs 8.83 million in March 2009.
Choudhari defends the performance of the services segment, saying that the division is relatively new and will take time to mature. He expects the services business to break even by March 2011.
One of the key challenges Aksh will face going forward is competition from telecom heavyweights. While it, no doubt, has a first-mover advantage in the IPTV business, it will have to compete with private operators such as Bharti Airtel and Reliance Communications, which have strong brands to back their services.
Over the past two quarters, however, Aksh has pulled out all the stops to make its presence felt in the market, most visibly through a concerted ad campaign.
Though the company has raised its tariffs, Choudhari points out that it offers a unique proposition and has the largest paying subscriber base in the IPTV segment.
The company plans to start manufacturing set-top boxes to decode IPTV signals from May 2010. All in all, Aksh is eager to capitalise on the opportunities presented by the IPTV and OFC markets.
