KUCHING: Astro Malaysia Holdings Bhd’s (Astro) current position as the pay-TV incumbent due to its exclusive Direct-to-Home (DTH) licence in the country with a nationwide-reach of 6.7 million households has created barriers to entry for competitors.
The research arm of Kenanga Investment Bank Bhd (Kenanga Research) stated in its research report, “Astro is also a rich local content producer and distributor with exclusive rights for some third-party internationally sourced channels in Malaysia.”
The group was noted to have “deep pockets for high capital expenditure requirements” and all these factors had created significant barriers for entry for any potential competitors interested to get a piece of the market share.
Kenanga Research believe there to be ample room for a higher household penetration rate to drive subscriber base.
“Although Malaysia has a higher pay-TV penetration rate of 50 per cent as compared with its regional peers such as Vietnam with 19 per cent and Thailand with 14 per cent, we are still lagging behind some of the higher income countries such as South Korea with 122 per cent and Taiwan with 97 per cent.”
The research house believed that penetration in Malaysia would continue to grow given the increasing household income level as well as the rising proportion of household moving into the higher income band.
It noted that Astro’s residential average revenue per user (ARPU) remained flattish for two consecutive years since financial year 2008 (FY08).
“However, thanks to the introduction of value-added services and innovative new initiatives since December 2009, the company’s residential ARPU has since increased consistently and recorded all-time high ARPU of RM92 in the first half of FY13.”
Astro’s services such as HD and PVR were the strong drivers for the ARPU growth as global data showed the the launch of these value-added services by other regional pay-TV players had also appeared to have a positive impact on their ARPU, Kenanga Research observed.
The pay-TV giant had also signed a new strategic partnership with Maxis Bhd (Maxis) to further expand its foothold into the Internet Protocol TV (IPTV) segment through Telekom Malaysia Bhd’s high speed broadband network that passes 19 per cent of the total household.
“Under the agreement, both parties are to exclusively develop and co-market unique consumer offers, combining Astro B.yond IPTV and Astro On The Go services with Maxis’ fibre, mobile, wireless internet and ADSL services,” it added.
The collaboration was for ten years and the two companies were set to package and co-market their joint IPTV products.
Kenanga Research projected Astro’s revenue to increase by 8.6 per cent to 9.6 per cent for financial years 2013 to 2015, mainly on the back of TV and radio segments’ revenue growth.
“Delving deeper, the TV segment’s revenue growth will be mainly drive by subscriber growth and rising ARPU. For pay-TV subscribers’ base, we have assumed a stronger growth of five to seven per cent per annum from FY13 to FY15,” the research house noted.