Billionaire Ananda mulls Maxis-Astro tie-up

Thinking ahead: Ananda is known to embark on corporate exercises that takes the market by surprise

PETALING JAYA: T. Ananda Krishnan, the single largest shareholder in Maxis Bhd and Astro Malaysia Holdings Bhd, is believed to be looking at a corporate exercise involving the two entities to strengthen their position in the changing technology and media landscape.

Sources said the low-profile tycoon, who controls the companies through privately-owned Usaha Tegas Sdn Bhd, has been looking at how to position the group’s telecommunications and media business in line with increasing competition.

“The global trend is for a consolidation between the companies that provides connection to consumers and content providers. It is happening everywhere and Usaha Tegas is in the best position to capitalise on it,” said a source.

Ananda, who tends to read the trend well ahead of others especially in the area of technology, sees increasing competition for both Astro and Maxis.

“Broadband rates are not going to go up. That is a given as both the new and the old government want faster connectivity at lower rates. Going forward it would be hard to maximise further unless competitors drop out.

“As for Astro, it is facing competition from multiple fronts. Illegal satellite dishes are being installed to tap into the services of other pay-TV operators located in other countries. Astro is also facing competition from over-the-top (OTT) service providers offering specialised content at lower rates,” said the source.

Among the OTTs are Netflix, which features largely western movies and dimsum that concentrates on oriental contents from South Korea to Thailand.

An analyst said he would not be surprised if Ananda uses Maxis to takeover Astro.

“It is similar in the United States where traditional telecommunication companies are buying entertainment companies. Corporate exercises between telco and entertainment companies have received the nod from the US legal system last week,” said an analyst.

The US court gave the green-light for telecommunications giant AT&T to take over Time Warner – a deal that is valued at US$80bil (RM240bil).

The 21st Century Fox, which is owned by Rupert Murdoch, is another media entertainment company being eyed by two suitors. They are cable and media company Comcast and Walt Disney, which is also a giant media company.

CBS Corp and Viacom, two companies owned by Sumner Redstone, are looking at a re-merger after a split 13 years ago.

The split was done to help enhance value of Viacom, a company that creates content for the media industry. As for CBS, it is giant media company providing services from cable network to owning publishing houses.

Astro was reported to be a subject of privatisation by Ananda two weeks ago. However the company denied that it had been informed of such developments by its major shareholder.

Astro’s share price took a beating due to lower earnings and it was losing its position as the sole broadcaster of the World Cup. After May 9, the new government embarked on a fund raising to telecast some of the matches over RTM’s free-to-air channels.

The government has stated its intention to end monopolies – something that is not expected to affect Astro much because its 10-year protection of being the only satellite pay-TV is already at the tail-end.

Affin Hwang, in a recent research report, upgraded Astro to a “hold” with a target price of RM1.90 despite it coming out with a set of earnings that is “slightly below expectations”. Affin Hwang also noted that the company would continue to face challenges in the changing media industry.

Ananda is the single largest shareholder in Astro with 40%. He has 62.42% in Maxis, the leading mobile telecommunication service provider in the country.

Astro has a market capitalisation of RM8.34bil while Maxis towers above it with a value of RM44.16bil.

The tycoon is known to embark on corporate exercises that takes the market by surprise. In 2007 he took Maxis Communications Bhd, a company that had domestic and international operations private and re-listed only the Malaysian operations less than three years later.

Astro was re-listed in 2012 and its share price has not taken off as anticipated.