MYTV negative for TM if it takes over service
KUCHING: Telekom Malaysia Bhd’s ( TM) potential takeover of the MYTV Broadcasting Sdn Bhd ( MYTV) has been viewed negatively by analysts as the takeover will have a substantial impact on the company.
In a report, the research arm of AmInvestment Bank Bhd (AmInvestment) noted that Communications and Multimedia Minister Gobind Singh Deo has indicated that the analogue switch-off to digital is still targeted in 1Q2019 as the reallocation of the 700MW spectrum to cellular operators remains on track.
MYTV was selected back in 2014 to spearhead the national digital terrestrial television switch- off from analogue to digital broadcasting. MYTV’s myFreeview service was launched last year, which is accessible via a decoder.
“We understand that there is speculation that TM may be requested to take over MYTV to enable the switchover as planned.
“We view such a potential development negatively, as the taking over of MYTV will easily require additional capex of RM300 million for the remaining sites to be built over Malaysia.
“Additionally, MYTV’s outstanding bills may also lead to substantive receivable write- offs to TM’s bottom line,” the research team opined.
It noted that according to reports, MYTV’s broadcasting services could be suspended in several states over non-payment of over RM60 million outstanding bills to TM. The outstanding bills amount to 10 per cent of TM’s financial year 2018 forecast (FY18F) earnings.
From October 11 to 25, 20 broadcasting sites have been shut down in Sabah, Sarawak, Kelantan, Terengganu, Pahang, Negeri Sembilan, Melaka and Perak, while another 14 could be shut down on November 6. This will affect RTM1, RTM2, TV3, NTV7, 8TV, AlHijrah and TV9 stations.
“MYTV has spent RM400mil for 34 sites currently which serve 92.7 per cent of the population, while the expansion of those sites to 60 will reach a coverage of 98 per cent.
“Last year, MYTV signed an agreement with TM to pay RM915 million over 15 years which include annual payments of RM61 million after 60 sites are operational. Since the full 60 sites are not operational, MYTV has only paid RM33 million for services rendered to TM in 2016 to 2017,” AmInvestment explained.
All in, the research team maintained a ‘ hold’ call on the stock from the group’s clouded longer term prospects, given the intensifying broadband competition and implementation of the Mandatory Standard on Access Pricing ( MSAP), which has reduced wholesale prices for third-party operators to access TM’s highspeed broadband network.