Sixteen years, one market delisting and two listings are the numbers that sum up the corporate journey so far of Astro, until recently Malaysia’s unrivalled pay-television broadcaster.
This coming Friday the company starts a new journey as it finds its way back to Malaysia’s stock exchange for a re-listing. It is its second since it began beaming channels into Malaysian households in 1996, providing an alternative to the limited choices offered by the free-to-air channels and the small pay operator Mega TV, which has long since disappeared.
Astro, then known as Astro All Asia Networks Plc, was first listed in 2003 and the re-listing comes nine years later. In its first foray onto the bourse, it sold its shares at 3.65 ringgit apiece. It was taken private at RM4.30 a share in 2010 by major shareholder T. Ananda Krishnan, Malaysia’s second richest man.
After an absence of nearly two years from the exchange, it is returning as Astro Malaysia Holdings Bhd, and with a bang because it has attracted 22 cornerstone investors including the US hedge fund Och-Ziff Capital Management. Its shares were oversubscribed many times over.
To help ensure good prospects when the company’s shares resume trading, the cornerstone investors have agreed to a lock-in period of three months.
For its current IPO, according to the updated prospectus, it is aiming to raise up to US$1.75 billion or 5.38 billion ringgit — the third largest IPO in Malaysia and sixth largest globally this year. In 2003, Astro raised RM2.03 billion.
Malaysia has been Asia’s top IPO destination this year and Astro’s offering will bring the value of IPOs in the country to US$7.3 billion, accounting for nearly one-quarter of all new listings in Asia-Pacific.
The wave of IPOs stems from a confluence of factors, including government privatisations and a strengthening Southeast Asian economy that has stoked interest from a captive domestic investor base and global fund managers.
The plantation giant Felda Global Ventures Holdings Bhd, which raised US$3.3 billion, was largest IPO in the country and third largest in the world this year when it was listed in June. IHH Healthcare Bhd raised US$2.1 billion in Malaysia’s second largest IPO this year.
Astro will have a market value of 15.36 billion ringgit or US$5.02 billion, which is nearly double the RM8.3 billion it was worth when it was taken private at 4.30 ringgit a share.
As a broadcaster, it has evolved over 16 years, beginning with 30 TV stations and 16 radio channels to more than 150 TV channels. Some channels are in high definition and the company also offers on-demand services, though it has turned “platform agnostic” as CEO Rohana Rozhan often says.
For most of those 16 years, no rival could take on Astro as both Mega TV and MITV were too small and disappeared not long after they emerged.
But now the company does not have all parts of the market to itself. Two years ago when Astro sought to deliver content over fibre-optic lines to multi-dwelling units in partnership Time dotCom Bhd, other internet protocol TV players joined the fray.
The competition includes the country’s largest fibre company, Telekom Malaysia (TM), and while it lacks the variety of Astro, particularly in sports programming, the interest in its channels is gaining traction.
There are also other niche IPTV players that Astro has to contend with, but what the market wants to see is how Astro will shrug off newcomer Asian Broadcasting Network (ABN), which is running trials on fibre.
ABN is the new digital cable TV player that hopes to make its debut later this year. It also has been quick to play on Astro’s weakest point, disruption of satellite signals during heavy rainstorms.
To fight the fibre-optic rivals, Astro has ended up in a partnership with sister company Maxis Bhd. The latter was aspiring to be an IPTV player in its own right but the shareholders appear to have told both to work together instead of slugging it out. Now Astro will be a content provider on the Maxis fibre network, a large chunk of which is leased from TM.
CEO Rohana seems unperturbed by the noise the other market players are making, but had the company not had a fibre business, perhaps the picture would be a lot different.
“Regardless of any new entrant, what we see is an opportunity to grow the business,” she is reported to have said. To her, the fibre tie-up is a “natural progression of the business with the advent of new technologies”.
She remains confident Astro can amass the remaining 3.5 million of the country’s 6.6 million TV households with fibre and Astro-on-the-Go, which is programming offered on iPads. Astro now has 3.1 million subscribers.
Astro may has “upped its ante in the local IPTV war’’, says a broadcasting industry observer, but the question is can it still maintain its stronghold on all global sporting events when the government wants all parties to share them? Until more details are released on that, Astro is still “king of sports”, says the observer.
With all of its offerings and potential to win new business Astro expects its average revenue per user (ARPU) to rise although it offers no precise projections. This year it is estimated at RM94 per month, up from RM82 last year.
Astro earned RM629 million in net profit for its financial year to Jan 31, 2010, on RM3.8 billion in revenue. It did not give projections in its IPO prospectus for the current year. It has debts of RM3.7 billion.
Though the broadcaster has all the investors it needs, until it sheds more light on its future earnings, some brokerages have a hold call on the stock. They see its fair value at 3.15 ringgit a share, just 5% above the IPO price, based on a dividend discount model.