Astro falls in active trade


KUALA LUMPUR: Shares of Astro fell in active trade on Monday in line with the cautious markets though the price reaction could be seen as overdone.

At 2.51pm, Astro was down 19 sen to RM2.81. There were 53.61 million shares done.

The FBM KLCI was down 1.68 points to 1,664.67. Turnover was 733.66 million shares valued at RM637.37mil. Declining counters beat advancers two to one, or 385 losers to 190 gainers and 290 stocks unchanged.

UOB Kay Hian Malaysia Research said there were several entry barriers for competitors seeking to compete against Astro.

In its report issued ahead of its IPO last Friday, the research house said Astro had exclusive rights to broadcast via satellites (DTH) until 2017, which essentially prohibited any competition from using the same technology to broadcast TV programmes.

UOB Kay Hian Research also pointed out Astro's large variety of exclusive popular international content also prohibited competitors from broadcasting those programmes in Malaysia.

"Its 68 Astro-created TV channels, with more than 40,000 hours of in-house produced content for the local audience, makes it difficult for a newcomer to penetrate the local content segment.

"The heavy capex that is needed to build a broadcast network acts as a deterrent to would-be competitors. This includes the need to set up terrestrial broadcasting network, operating centre and satellite transponder space.

"A long gestation period needed to set up an entire broadcasting system before commercialisation can even begin. This gives Astro a significant head-start over any new entrant," said UOB Kay Hian Research.

However, the research house said excessive bidding for exclusive content may result in cost overrun. This includes bidding for the popular English/Barclay's Premier League (EPL/BPL) as well as bidding for content that will boost its premium position in the pay TV market.

Another factor it said were competitive pressures. Already broadcasting variations of what was available on Astro, Telekom Malaysia (TM) could be a force to be reckoned with in the IPTV segment in the future.

Other risks were that the younger generation was increasingly turning to the internet for entertainment, such as YouTube, which could threaten Astro's viewership as well as advertisement revenues.

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