Broadbandindia Magazine

Dish TV, the country’s largest satellite television service provider, will shut down its sales operations in Uttar Pradesh from October1, following the state’s levy of 30% entertainment tax on the sector in addition to 29% tax being paid by such companies.

”We plan to close down sales operations in Uttar Pradesh within three months because the new tax demand renders the business unviable. Currently, we are complying with the demand notice served to us in June. From October, we plan to close down sales of new set-top boxes,” said Jawahar Goel, managing director of Dish TV.

Existing subscription charges to increase

For an existing subscriber in the state, the minimum subscription rate for a Dish TV connection may increase to about Rs 160 per month from the current Rs 125 per month.

The move by Dish TV, a part of the Zee Group, comes on the heels of direct-to-home (DTH) service providers and their distributors moving the Allahabad High Court demanding a stay on the new levy. “It has been proven that wireless is the medium to reach the masses, whether it’s TV or mobile phone. The move will make our revenues go into negative and kill the growing DTH industry,” said Ajay Puri, director and CEO of DTH for Bharti Airtel. The company has over a lakh subscribers in the state.

New taxes – a death knell for DTH

Echoing a similar sentiment, Vikram Mehra, chief marketing officer at Tata Sky, said “The new tax will make the cost of DTH service in the state prohibitive. Consumers will have no choice, but to shift to cable operators.”

The service providers are concerned that Uttarakhand has followed Uttar Pradesh’s example with a 30% entertainment tax on DTH service. In Assam, the Supreme Court has stayed an increase in entertainment tax. Other states, too, see revenues in entertainment tax on DTH service, while Bihar levies Rs 15 per connection, Goa levies Rs 25. Dish TV plans to pass on taxes to the consumer by hiking subscription charges in the affected states.

”The voters in these states should know the moves by their governments. We are not worried in terms of opportunity cost, as we will remain the largest player,” said Mr Goel.

UP statistics

On a national base of 12-13 million DTH connections, Uttar Pradesh has about 5,00,000 DTH subscribers as a majority of households in the state prefer subscribing to the cheaper cable TV connection. About 33% households in the state own a TV set.