China Digital TV's CEO Management Discuss Q2 2012 Results - Earnings Call Transcript

First of all, cable development and digitalization are progressing steadily. As of the end of Q2, 202 million households in China have cable. Within this group, about 125 million or 62% are digital cable TV subscribers, with 5.5 million households being added in the second quarter. We expect this growth momentum to continue over the next few years.

Secondly, in Q2, we saw a steady push for digital penetration in lower-tier cities and rural areas. We performed particularly well in Jiangsu, Heilongjiang, Guangdong and Shandong, which enabled us to maintain our leading position with a 58.4% share of China’s CA market, according to Zhongguang Luoda.

Third, looking ahead, the previously discussed trend of CA product purchasing decisions being made at the provincial level leads us to expect to see contracts in larger volumes from provincial cable operators. Specifically, in the first half of 2012, we signed framework contracts to provide smart cards to provincial or municipal cable operators in Sichuan, Henan, and Chongqing. Among the three networks, Sichuan and Chongqing cover 5 million cable households and 3 million terrestrial TV households, respectively.

Finally, in the near future, we expect the conversion from standard definition set top boxes to high-definition set top boxes will become a driving factor for demand of our CA products.

Beyond the traditional domestic market for our CA products, in Q2 we continued to make progress in international markets. We delivered another 380 thousand mounted device chipsets to our partner One Sky in Thailand during the quarter, bringing total shipments to date to almost 1.7 million units. We also received another mounted device chipset order of 500 thousand units from One Sky this quarter. Going forward we expect steady demand from this program. In Q2, China Digital TV also fulfilled its agreement to deploy a Malaysian ABN TV Station with CA head end systems and provide licensor software.

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