Maybank IB maintains hold on Astro

Industry sources said BTVM and Astro have disagreements over several issues that could possibly lead to legal suits.

KUALA LUMPUR: Astro Malaysia Holdings Bhd’s move to revise its price for sports pack could be counterproductive in assisting to achieve its target of nil net pay-TV  additions in the current financial year ending Jan 31, 2017 (FY17), according to Maybank Investment Bank.

Astro will be raising its Sports Pack price by RM8 (RM8.48 including 6%  GST) beginning Aug 1, 2016.

In  the  near-term, Sports Pack subscribers will be entitled to 60 days preview of OD Plus, Astro Cricket and Setanta Sports Channel from July 16 - July 19 to compensate. In the long-term, two new sports channels (eGG Network and BeIn) will be added to the Sports Pack and two existing sports channels (Astro  Super  Sports  4 and Astro Arena) will be made available in HD.

Maybank fears that subscribers would downgrade or disconnect their packages in response, due to the current weak consumer sentiment.

“All else being equal, this price hike would have raised average revenue per user (ARPU) by RM1.60 in  FY17. That said, we note that the last price hike of RM5 for HD products in December 2014 was not so well absorbed as first quarter of FY16  (following full quarter) ARPU was  flat  quarter-on-quarter and FY16 churn rate inched up 40 basis points quarter-on-quarter as subscribers either downgraded or disconnect their packages in response,”

Given that consumer sentiment is currently weak, Maybank did not believe that this price hike will lift FY17 ARPU markedly.

“In fact, we gather that it may be counterproductive in assisting ASTRO achieve its target of nil net Pay-TV additions in FY17. Recall that Astro lost 46,000 Pay-TV subscribers in FY17, which  was before this price  hike.

“We maintain our earnings estimates and RM2.75 discounted cash flow-based target price which reflect nil net Pay-TV additions and RM99.40 ARPU in FY17,” Maybank said.