Astro to cut capex following operation digitalisation

KUALA LUMPUR: Astro Malaysia Holdings Bhd sees its annual capital expenditure (capex) of RM500 million to gradually decline as the media group embarks on thorough operation digitalisation .

Chief Executive Officer, Datuk Rohana Rozhan said the company expected the capex to reduce to RM460 million next year, following its target to digitalise its legacy systems and platform by year-end.

"We are on track to achieve 75 per cent digitalisation of operations by year-end, of which 23,000 hours of content are already in the cloud technology. The cost per unit of leasing the cloud technology is lower as compared to purchasing services or investing in traditional infrastructure," she told reporters after company's annual general meeting here yesterday.

On the breakdown of the capex allocation, she said 50 per cent was set aside for traditional infrastructure and maintenance, whereas the other 50 per cent would go to finance customers' set-top boxes or decoders.

Meanwhile, commenting on the company's financial performance, Chief Operating Officer, Henry Tan said the media group had projected its second-quarter financial results to be significantly better as compared to the first quarter.

Its pre-tax profit for the first quarter (Q1) ended April 30, 2017 slipped to RM269.5 million from RM280.07 million registered in Q1 2016 while revenue fell 2.7 per cent to RM1.33 billion from RM1.36 billion previously.

"Performance of the advertising expenditure (adex) segment and our e-commerce product, Go Shop, will be the boosters for revenue growth in the immediate term.

"Although Go Shop's volume and sales increased in the last quarter, customer sentiment was weaker as the value was lower, meaning customers opted for lower priced goods," he said.

Tan also noted that Astro's adex fell by five per cent but better than the industry average, which contracted by 10 per cent.

Moving forward, Astro aimed to increase contribution from the digital adex segment to 30 per cent in the future from five per cent currently, he said.