Astro's RM500mil home shopping channel

KUALA LUMPUR: Astro Malaysia Holdings Bhd is expected to launch a home shopping channel by the end of the year.

The pay-TV operator said the new channel was expected to contribute RM500mil to the group’s top-line in five years.

“We are now working very closely with our South Korean partner to meet the target of launching the service by the end of this year,” Astro chief commercial officer Liew Swee Lin told the press after the company’s AGM here yesterday.

“We expect the channel to contribute RM500mil to revenue top-line in five years’ time,” she added.

According to Liew, the home shopping channel would initially target the Malay market, which accounts for about 60% of Astro’s subscriber base.

Among the products that will be marketed are lifestyle, healthcare and home-care products.

CIMB Research in its report said of Astro’s home shopping venture:

“We believe that it is a positive move by the company to diversify its operations, and a good way to leverage its readily available facilities such as the call centre, channel platforms and production studio.”

Astro’s home shopping business is a new venture formed via its collaboration with South Korea’s GS Home Shopping Inc.

The former’s unit Astro Retail Ventures Sdn Bhd had in February signed a shareholders’ agreement with GS Home to set up a joint-venture company, Astro GS Shop Sdn Bhd, to carry out the home shopping business through various platforms, including but not limited to TV home shopping, Internet shopping and mobile shopping. Astro GS Shop, which has a total capitalisation of RM70mil, will be 60% owned by Astro Retail and 40% by GS Home.

Astro saw its customer base grow 11.6% to a total of almost four million subscribers in its first quarter ended April 30, 2014, from 3.58 million subscribers in the corresponding period last year.

The group’s average revenue per user (Arpu) rose RM2.90 from RM94.20 to RM97.10 during the quarter in review.

Astro chief executive officer Datuk Rohana Rozhan said the group was on track to meet its targets for the financial year ending Jan 1, 2015 (FY15), following the encouraging first quarter results.

She also reckoned that the group’s Arpu would likely reach RM100 by the end of the current financial year.

At a recent conference call with analysts, Astro’s management had pointed out that it expects higher Arpu, advertising revenue and licensing income to generate double-digit growth in revenue for its FY15.

The company also said it expects to add about 450,000 to 500,000 new subscribers in the current financial year.

According to Public Investment Bank Research’s report, Astro had noted that the latter’s earnings before interest, tax, depreciation and amortisation margin could improve 1%-2%, lifted by its set-up-box swap-out exercise.

Content costs, however, would be at the upper end of the 32%-35% range of subscription revenue due to costlier sports content cost such as the World Cup 2014.

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