China Digital TV Holding's CEO Discusses 4Q2011 Results - Earnings Call Transcript

China Digital TV Holding Co., Ltd ( STV)

Q4 2011 Earnings Call

February 29, 2012 7:00 p.m. EST

Executives

Nan Hao – Senior Supervisor, Ir

Dong Li – President and CEO

Zhenwen Liang – CFO

Analysts

Philip Wan – Morgan Stanley

Question-and-Answer Session

Operator

The question-and-answer session of this conference call will start in a moment. In order to be fair to all callers who wish to ask questions, we will take one question at a time from each caller. If you have more than one question, please request to join the question queue again after your first question has been addressed. One moment please for the first question.

Our first question comes from the line of Philip Wan with Morgan Stanley.

Philip Wan – Morgan Stanley

Thanks. Good morning, Mr. Li, Mr. Liang and Nan Hao. Thanks for taking my question.

First of all, could you share with us the progress of China -- cable TV digitalization in China from what you have seen? For instance, how many province have already completed the consolidation? And in what percentage of network has operated a two-way network? Thank you.

Nan Hao

Okay. First of all, I will ask Mr. Liang to answer your question.

Operator

And once again, ladies and gentlemen, if you would like to ask a question, please press star then 1 on your telephone.

Nan Hao

First, your first question will be answered by Mr. Dong Li.

Dong Li

(Chinese language spoken)

Nan Hao

First, your first question about the network consolidation and the digitalization projects in China. Currently, the cable operator network consolidation, currently we have more than 20 provinces have completed, finished their consolidation. And for the digitalization project, the majority of the city has completed their digitalization projects, and for the following years the digitalization projects will be developed in tier 3 and 4 [counties].

So, go ahead. Do I answer your question, Philip?

Operator

And once again, if you would like to ask a question, please press star then 1.

We do have a question from the line of Philip Wan with Morgan Stanley.

Philip Wan – Morgan Stanley

Hi. My follow-up question is about your ASP.

Nan Hao

Okay.

Philip Wan – Morgan Stanley

Hello? Can you hear me?

Unidentified Company Representative

Please continue.

Philip Wan – Morgan Stanley

Sure. Your ASP only declined at 1% in 2011. And what is the reason that you're expecting another 5% to 8% drop in -- coming into 2012? And also, I appreciate if you could share with us your expectation of the unit cost trend this year as well. Thank you.

Nan Hao

Okay.

Dong Li

(Chinese language spoken)

Nan Hao

Okay, Philip, for your ASP questions, there are some reasons cause this 5% to 8% decrease in 2012. The first reason is, as we have already mentioned in the beginning of 2011, we estimated the ASP will have 5% decrease in 2011. So, from the market competition point of view, we have 20% higher ASP price compared to our competitors. So, for 2012, the pressure comes from the price of other competitors. This is one reason.

And the other reason, cause of the decrease of the ASP, because after the consolidation of network cable operator, and the cable operator have some price pressures [for the six] suppliers when they purchased the smart cards. So that’s actually the two reasons caused the ASP decrease by 2012.

Philip Wan – Morgan Stanley

Thank you. How about the unit cost trend going into 2012?

Nan Hao

So you're asking about the unit cost trends, right?

Philip Wan – Morgan Stanley

Yes.

Nan Hao

Well, the unit cost will be decreased by around 4% due to the chip cost decrease.

Philip Wan – Morgan Stanley

All right. Thank you. And then my last question, you mentioned that the dividend payment is expected to be paid out at the end of March or early April. I wonder, have you already obtained the appropriate approval from the government at this point?

Nan Hao

Okay, I will ask Mr. Liang to answer this question.

Philip Wan – Morgan Stanley

Thank you.

Zhenwen Liang

(Chinese language spoken)

Nan Hao

We have mentioned the approval progress. The first approval, we need to -- before we pay the dividends, we need to get approval from the foreign exchange authority and --

Zhenwen Liang

(Chinese language spoken)

Nan Hao

So, currently we have already applied for the buying US dollars from the foreign exchange authority. And they will be taking around 30 to 40, no more, working days for their final approval. After that, we can pay the dividends around end of March or at the beginning of April.

So, Philip Wan, did I answer your questions?

Philip Wan – Morgan Stanley

Right. Thank you.

Nan Hao

Okay.

Operator

And once again, ladies and gentlemen, if you would like to ask a question, please press star then 1.

We are approaching the end of the conference call. I will now turn the call over to China Digital TV’s Nan Hao for closing remarks.

Nan Hao

Once again, thank you for joining us today. Please don’t hesitate to contact us if you have any further questions. Thank you for your continued support. And we look forward to talking with you in the coming months. Thank you.

Operator

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. Good day.

Read the rest of this transcript for free on seekingalpha.com

More from Stocks

Finding Stocks Right for You: Cramer's 'Mad Money' Recap (Friday 8/25/18)

Finding Stocks Right for You: Cramer's 'Mad Money' Recap (Friday 8/25/18)

Flashback Friday: Amazon, Chip Stocks, Memorial Day

Flashback Friday: Amazon, Chip Stocks, Memorial Day

Week Ahead: Wall Street Looks to Jobs Report as North Korea Meeting Less Certain

Week Ahead: Wall Street Looks to Jobs Report as North Korea Meeting Less Certain

Dow and S&P 500 Decline, Energy Shares Fall as U.S. Crude Oil Slides 4%

Dow and S&P 500 Decline, Energy Shares Fall as U.S. Crude Oil Slides 4%

Replay: Jim Cramer on the Markets, 10-Year Yield, Oil Prices and Foot Locker

Replay: Jim Cramer on the Markets, 10-Year Yield, Oil Prices and Foot Locker