New Delhi: The government stands to gain tax revenue of at least of R55,000 crore over the next 10 years with the complete digitisation of the cable industry as it will lead to 100% declaration of income by cable operators. Currently, only 15% income of the R20,000 crore cable industry is estimated to be declared and taxable while the rest goes undeclared.

Currently, of the 108 million homes with cable television connectivity, less than 10% have access to cable via a set-top box while 45% homes have access to direct-to-home services.

Therefore, in order to achieve 100% digitisation, the cable industry will have to shell out R40,000 crore over next three years under the proposed government-mandated four-phase digitisation process. These findings are part of the latest report from international media research firm Media Partners Asia (MPA).

According to the MPA report, multi-service operators (MSOs) will see a sixfold jump in their subscriber base post-digitisation, while they could also witness a 12- to 16-fold jump in their valuations after one year of digitisation.

"About $8 billion in investment is required to digitise the entire market. The requirement is about $300 million for phase 1, which we believe can be funded adequately amongst the national MSOs," Vivek Couto, executive director of MPA, told FE. However, the first phase of digitisation which covered only the Delhi, Mumbai, Kolkata and Chennai represents only around 10% of the analog cable universe in the country.

"With addressable digital deployment, subscriber declaration levels will increase from 15% currently to 100%, while the retained Arpu (average revenue per user) will increase by six times," said the MPA report.The proposed digitisation of cable TV will improve the consumer experience and resolve legacy issues from analog cable services.

Under a digitised cable regime, consumers will gain more TV channels, attractive tiering options with differentiated content across local, regional and niche genres, apart from a better viewing experience and improved quality of service. "Digital cable TV will also be affordable for the consumer. As per international benchmarks, spending on pay-TV typically accounts for around 5% of GDP per capita," Couto said.

On the downside the MPA report cautions the government. "If the current analog cable distribution model remains in place and digital cable penetration remains limited, the potential cumulative value of the tax receipts lost by the government would reach $11 billion over the next decade or a little over $1 billion per year," it said.