(16 February 2008 8:25 pm)

MUMBAI: Subhash Chandra-promoted Dish TV is in the process of lining up a debt of $100 million (Rs 4 billion) as it readies to aggressively take on competition ahead of the launch of DTH (direct-to-home) services from Anil Ambani's Big TV and Bharti Airtel.

Dish TV has a total fund requirement of Rs 11 billion. The Zee Group company has already raised Rs 2.5 billion with a dilution of 4.9 per cent to Indivision Capital, the private equity arm of Kishore Biyani's Future Capital.

"We are close to lining up debt of around $100 million which should take care of our funding requirement for about a year. In form of equity, we have raised Rs 2.5 billion. But we will definitely need to raise further equity and are in talks for it," says a source .

Dish TV's debt currently stands at around Rs 4.25 billion. The company is cash negative at the moment and needs to infuse capital as it ramps up DTH customers.

Dish TV's customer acquisition cost in the third quarter is Rs 1880, up from Rs 1,628 in the July-September period. A major chunk of the fund requirement will be used to grab new customers with subsidy on hardware and heavy advertising.

The brand building strategy with film star Shah Rukh Khan will continue to put pressure on advertising expenses. "We will be roughly spending Rs 300 million on advertising and promotions every quarter as competition intensifies," says the source.

Dish TV is also looking at carriage fees from the weaker content providers. The company hopes to bring down the content cost which is currently running at 55-60 per cent of the ARPUs (average revenue per user).