[Via Satellite 09-21-2015] Astro Malaysia Holdings Berhad, the top pay-TV provider in Malaysia, anticipates adding 50,000 additional subscribers during fiscal year 2016. The company announced it gained 15,000 more subscribers while reporting its financial results for the first six months of fiscal year 2016, ending Jan. 31, 2016, and launched seven new channels.
Investors view Astro positively as a company with significant potential. Many regarded this latest earnings report as confidence building.
“We are encouraged to learn that Astro recorded 15,000 growth in pay-TV subs in the quarter (vs. the 5,000 subs loss in 1QFY16) as customers return to Astro’s platform in time for the Raya festivities (Raya is an Islamic festival and is recognized as a public holiday in Malaysia). We think that this explains the gradual decline of the churn rate from 10.3 percent in 1QFY16 to 9.8 percent in 2QFY16. In addition, management also attributed the improvement in pay-TV subs to conversion from its NJOI customers (its prepaid TV offering) to the pay-TV platform. For 1HFY16, management estimated that Astro has completed about 19k conversion from prepaid to pay-TV platform,” CIMB Analyst Mohd Shanaz Noor Azam wrote in a Sept. 16 research note.
Revenue for Astro grew 4 percent Year over Year (YoY) to RM2.7 billion ($640 million), and EBIDTA climbed 7 percent to RM962 million ($227 million). The pay-TV operator’s CEO Rohana Rozhan said in a Sept. 15 statement that the company added 426,000 net TV customers in H1FY16, increasing Astro’s market penetration in Malaysia to 65 percent, up from 60 percent the same time last year.
“Astro is our top pick for the Malaysian media sector due to its strong three-year EPS CAGR of 21 percent and dominant market position with a 65 percent market penetration. Rising ARPU growth from value-added services and stronger contribution from home shopping are potential catalysts,” Mohd Shanaz continued.
He noted, however, that Malaysia’s Goods and Service Tax, enacted in April 2015, has influenced customer spending, and is likely the cause of a 1.4 percent drop in Astro B.yond HD subs.
In an April 2015 interview, Swee Lin Liew, Astro’s chief commercial officer, told Via Satellite the pay-TV provider added 10 new channels last year, and reached a total of 48 HD channels. Liew said Astro anticipates doubling the amount of satellite capacity it uses over the next five years to have room for significantly more HD channels as well as more SD channels. She said the company also envisions reaching a household penetration rate of 84 percent.
“Amid a weak consumer sentiment, management noted that while low-to-mid ARPU customers continue to adjust their wallet share, premium customers have been spending more, which is reflected in the pick-up in its multi-room and PVR net adds — this could continue in the near future,” Pankaj Suri, analyst at Nomura, wrote in a Sept. 16 research note.
Rozhan said Astro is also aiming to increase the take up of connected boxes and of Astro on the Go from 181,000 to 500,000 by the end of the year. Astro on the Go, which now lets users download programs to mobile devices for offline viewing, saw downloads increase by 31 percent YoY to 1.6 million with weekly viewing time exceeding 140 minutes. Astro has also seen success with the launch of its Go Shop channel, and plans to launch a second Go Shop channel in Chinese in November 2015.