Astro plans to increase penetration rate by 4%

Good show: Tan and Rohana at the press conference to announce Astro’s financial performance. Rohana says the company has been prudent in its forex hedging.

KUALA LUMPUR: Astro Malaysia Holdings Bhd’s net profit for its third quarter ended Oct 31, 2016 jumped 42% to RM151mil from RM106.01mil in the previous corresponding period, mainly due to lower net finance cost and decrease in depreciation of property, plant and equipment.

The pay-TV operator said its strategy, moving forward is to continue to grow its customer accessibility.

It plans to increase the household penetration rate to 75% by the end of next year from 71% presently.

This translates to around five million viewers (3.4 million pay-TV; 1.6 million from NJOI, a subscription-based free TV service).

In a filing with Bursa Malaysia yesterday, the company said the lower net finance cost was due to lower unrealised foreign exchange (forex) loss arising from unhedged finance lease liabilities of RM48.8mil and unhedged vendor financing of RM8.9mil.

“The increase in net profit is mainly due to decrease in depreciation of property, plant and equipment by RM32.6mil and lower net finance cost by RM67.2mil offset by decrease in earnings before interest, taxes, depreciation, and amortisation of RM4.7mil, impairment of investment in associate of RM15.1mil and higher tax expenses by RM27mil.”

Revenue during the quarter grew to RM1.42bil from RM1.37bil a year earlier.

For the nine-months ended Oct 31, 2016, Astro’s net profit increased to RM478.61mil from RM411.55mil in the previous corresponding period while revenue rose to RM4.22bil from RM4.07bil previously.

The company declared an a third interim single-tier dividend of three sen per ordinary share of 10 sen each, to be paid on Jan 6.

During a press conference on Astro’s financial results, group chief executive officer Datuk Rohana Rozhan said the company had been prudent in its forex hedging.

“We hedge between five and nine months ahead, so we’re covered for the current financial year. What we’ve hedged is better than the current prevailing rate,” she said.

“Our strategy is to continue to grow our accessibility. We have a household strategy and an individual strategy. It’s not one size fits all,” said Rohana, adding that the bulk of the growth in its subscribers would come from the company’s NJOI segment.

Meanwhile, chief operating officer Henry Tan said Astro was not unduly worried about competition from streaming platforms.

“In terms of viewing time, it’s almost four hours per person per day, which is healthy. The numbers are actually growing despite the onset of streaming and download services.”

Rohana also said that advertising expenditure (adex) by Astro advertisers grew 13% year-on-year to RM524mil during the nine-months period.

The company’s share of TV adex and radio expenditure rose to 37% and 73% respectively, while average revenue per user grew 0.6% year-on-year to RM99.9 during the nine-months period.

Rohana said content cost amounted to 34% of the company’s TV revenue during the period.