CIMB Research projects higher content cost for Astro Malaysia

PETALING JAYA: Pay-TV provider Astro Malaysia Holdings Bhd may see content cost increase for the financial year ending Jan 31, 2019 (FY19), but the company’s prepaid satellite television service NJOI is expected to see better earnings delivery.

CIMB Research also projects higher average revenue per user (Arpu) from new packages and a turnaround at Go Shop, Astro’s online shopping platform. This will help offset potential earnings decline.

“Astro has remained resilient when the global media landscape has undergone a seismic shift.

“Its growing household penetration of 75% as at end-January 2018, as compared to 71% as at end-January 2017, shows that it has been able to withstand the cord-cutting phenomenon that is besieging pay-TV operators worldwide,” said CIMB Research.

According to Kenanga Research, Astro wants to increase its pay-TV subscription Arpu to RM101, underpinned by higher takeup of its vernacular and live sports packages as well as better monetisation of intellectual property creative contents.

But the company will be incurring higher content cost of about 36% of television revenue as a result of the major sport events, such as FIFA World Cup 2018, Gold Coast 2018 Commonwealth Games and 2018 Asian Games. Analysts also said Astro plans to introduce a RM120 one-time pass for the upcoming FIFA World Cup 2018 that will allow non-Astro customers to watch the entire tournament on any device.