T

he country'€™s largest pay-TV provider, PT MNC Sky Vision (MSKY), has voiced concern over '€œillegal operators'€ that potentially cause losses to the entire paid-television industry.

Effendi Budiman, MNC Sky Vision'€™s director of finances and investor relations, said the company was losing potential business because some of its customers relayed the television content to other households in surrounding areas for low fees.

'€œWe have found that these illegal operators are our own subscribers,'€ Effendi told The Jakarta Post on Monday.

Even though the potential losses were unquantifiable due to the nature of the operations, Effendi said that there could potentially be just as many people enjoying illicit broadcasting services as there were paying customers industry-wide.

'€œThere may be 3 million TV households consuming illegally broadcast content, just as many as the number of pay-TV subscribers from all of the industry'€™s players last year,'€ he said.

There are currently 253 million people in the country, which according to Effendi means an average of 50 million households with TVs. From that figure, only 20 million to 25 million can afford pay-TV services and are targeted by the company. '€œEven then we have a 7 percent market penetration rate,'€ he added.

According to the company'€™s first-half financial report this year, the firm posted Rp 1.58 trillion (US$ 135 million) in revenue, an 8.75 percent increase year-on-year.

However, the company also booked Rp 13.62 billion in losses, or a 13.39 percent decrease from the same period last year.

Effendi said his firm aimed to book a 30 percent increase in total revenue this year, up from Rp 3.02 trillion last year, with earnings before interest, taxes, depreciation and amortization (EBITDA) to stay at about 40 percent of the targeted revenue.

The company posted a 26.4 percent growth in revenue last year, from Rp 2.39 trillion in the previous year.

Effendi said that MSKY had been feeling the effects from illegal operators in the last three to five years. From a market perspective, however, he said that subscribers who benefited from relayed content were not traditionally part of the target market that the company pursued.

He said the people who paid for cheap access to the networks mostly had no fixed income and still regarded pay-TV a luxury. They also represented a high churn rate '€” an index measuring the '€œlifetime'€ of a customer consuming services.

'€œWe have intelligence in the field [to find out],'€ Effendi said.

In a corporate update on Monday, Sky Vision'€™s president director, Rudi Tanoesoedibjo, said that illegal operators had become more competitive in broadcasting paid content without paying royalties, prompting the firm to invite multimedia associations and law enforcers alike to rid the industry of such practices.

MSKY, which operates the Indovision, Top TV and Okevision networks, secured a lion'€™s share of the market last year with 2.3 million subscribers, or 74 percent of Indonesia'€™s pay-TV subscribers, according to a recent report by Media Partners Asia.

The company'€™s independent director said that Indovision subscribers made up 51 percent of the company'€™s subscribers, followed by Top TV and Okevision, which made up 34 percent and 15 percent, respectively.

He said that MSKY aimed to increase its market share to 75 percent this year by targeting 600,000 new subscribers, meaning its total number of subscribers could stand at between 2.9 million and 3 million by year-end.

Even so, he said it was unnecessary for the firm to contribute part of its capital expenditure to strengthen the security of its networks and root out the cause of illicit broadcasting.

The firm had allocated $40 million to capital spending throughout the first half and planned to spend $90 million to $100 million by year-end.