ORTEL - Ortel Commu.

📊 NSE: ORTEL 🏢 Entertainment / Electronic Media Software 📅 Last Updated: 12/14/2025 10:47

💰 Financial Performance

Revenue Growth by Segment

The company experienced a significant revenue decline of 39.67%, with total sales dropping from INR 184 Cr in March 2018 to INR 111 Cr in March 2019. Long-term performance shows a poor 5-year compounded sales growth of -18.4% and a 3-year growth of -28%, primarily due to the company entering the Corporate Insolvency Resolution Process (CIRP) and losing market share in the competitive cable and broadband segments.

Geographic Revenue Split

Revenue is generated from operations in the Indian states of Odisha, Chhattisgarh, Madhya Pradesh, Andhra Pradesh, Telangana, and West Bengal. While specific percentage splits per state are not disclosed, the company's core focus and 'Last Mile' network control are concentrated in these regional markets.

Profitability Margins

Profitability has severely deteriorated; the Operating Profit Margin (OPM) collapsed from 20% in March 2018 to -6% in March 2019. Net profit for FY19 was a loss of INR 51 Cr, following a massive loss of INR 95 Cr in FY18. This trend indicates that operating expenses (INR 117 Cr) now exceed total sales (INR 111 Cr), making the business model unsustainable without restructuring.

EBITDA Margin

The EBITDA margin is currently negative, reflected by an operating loss of INR 7 Cr in FY19 compared to an operating profit of INR 38 Cr in FY18. This 118% YoY decline in operating profit is driven by a 39.7% drop in revenue while fixed costs like depreciation (INR 28 Cr) and interest (INR 21 Cr) remain high.

Capital Expenditure

Fixed assets stood at INR 357 Cr in March 2019, a slight decrease from INR 364 Cr in 2018. Capital Work in Progress (CWIP) reduced from INR 30 Cr to INR 22 Cr, suggesting a halt in major new infrastructure expansion as the company focuses on insolvency proceedings.

Credit Rating & Borrowing

The company's credit rating is 'CARE D; ISSUER NOT COOPERATING', signifying a state of default. Total rated bank facilities amount to INR 59.98 Cr, comprising Long Term Term Loans of INR 39.98 Cr and Short Term Bank Overdrafts of INR 20.00 Cr. Borrowing costs are not explicitly stated but interest coverage is non-meaningful due to operating losses.

⚙️ Operational Drivers

Raw Materials

As a service provider, primary costs are not 'raw materials' but include bandwidth charges, content costs (pay channel costs), and network maintenance supplies, which contributed to total expenses of INR 117 Cr in FY19.

Import Sources

Bandwidth and content are sourced domestically within India from national telecom carriers and broadcasters, though specific vendor locations are not disclosed.

Key Suppliers

Specific content suppliers (broadcasters) and bandwidth providers are not named, but the company utilizes KFin Technologies Private Limited for registry and share transfer services.

Capacity Expansion

The company currently operates a two-way communication network for 'Triple Play' services. Planned expansion is currently stalled due to the CIRP status and a negative ROCE of -13.4%.

Raw Material Costs

Operating expenses represent 105.4% of total revenue in FY19, up from 79.3% in FY18. This increase in the cost-to-income ratio is due to the inability to scale down fixed network costs in line with falling subscriber revenue.

Manufacturing Efficiency

Manufacturing efficiency is not applicable; however, the company's ROCE has plummeted from 5% in 2018 to -14% in 2019, indicating highly inefficient use of capital.

Logistics & Distribution

Distribution is handled via a physical two-way cable network across six Indian states; maintenance of this 'Last Mile' infrastructure is the primary logistical cost.

📈 Strategic Growth

Expected Growth Rate

-28%

Growth Strategy

The company is currently in a defensive/restructuring phase under the Corporate Insolvency Resolution Process (CIRP). Any future growth is contingent on the successful implementation of a resolution plan, debt restructuring, and stabilizing the subscriber base for its 'Triple Play' (video, data, voice) services to improve the current -28% TTM sales growth.

Products & Services

Digital Cable Television, Analog Cable Television, High-speed Broadband services, and Value Added Services (VAS).

Brand Portfolio

Ortel, Ortel Communications.

New Products/Services

The company offers 'Triple Play' services (video, data, and voice), but no new product launches are planned given the current financial distress.

Market Expansion

Expansion is currently restricted; the company is focused on maintaining its existing footprint in Odisha, Chhattisgarh, MP, Andhra Pradesh, Telangana, and West Bengal.

Market Share & Ranking

The company is a regional MSO; specific market share percentages are not provided, but it is a significant player in the Odisha region.

Strategic Alliances

The company operates as a Multi System Operator (MSO), necessitating alliances with local cable operators (LCOs) for last-mile delivery, though specific partner names are not listed.

🌍 External Factors

Industry Trends

The media and entertainment industry is shifting toward digital and OTT consumption. The industry is growing in the broadband segment but disrupting traditional analog cable. Ortel's positioning is weak due to its financial default (CARE D rating) and inability to invest in technology shifts.

Competitive Landscape

Faces intense competition from national DTH players (Tata Play, Airtel DTH) and large-scale MSOs, as well as telecom giants providing integrated broadband/TV services.

Competitive Moat

The company's moat is its 'Last Mile' network control and two-way communication infrastructure. However, this moat is eroding as wireless broadband (5G) and national fiber players expand, making the high maintenance cost of physical cable a liability.

Macro Economic Sensitivity

Highly sensitive to consumer discretionary spending in regional India; a slowdown in rural/semi-urban income directly impacts cable and broadband subscription renewals.

Consumer Behavior

Shift toward 'cord-cutting' and preference for high-speed data over traditional linear television is reducing the ARPU (Average Revenue Per User) for cable services.

Geopolitical Risks

Low, as operations are entirely within India, though regional regulatory shifts in the six operating states can impact local licensing.

⚖️ Regulatory & Governance

Industry Regulations

Operations are governed by the Telecom Regulatory Authority of India (TRAI) regulations for broadcasting and cable services, including the New Tariff Order (NTO) which dictates channel pricing and revenue sharing.

Taxation Policy Impact

The effective tax rate is 0% as the company is reporting significant losses (INR 51 Cr loss before tax in FY19).

Legal Contingencies

The company has significant legal and financial risks, including being under the Corporate Insolvency Resolution Process (CIRP). It also reports contingent liabilities of INR 21.3 Cr, which could further impair the balance sheet if they crystallize.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the outcome of the CIRP; failure to find a resolution applicant could lead to liquidation. This poses a 100% risk to equity shareholders.

Geographic Concentration Risk

High concentration in Odisha and five other states; any regional economic downturn or natural disaster in these areas would disproportionately affect 100% of revenue.