Astro price hike may not bring in the bucks

Astro Malaysia Holdings Bhd

PETALING JAYA: The impending price hike to Astro Malaysia Holdings Bhd’s sports package might not help lift its earnings significantly

According to a report in the Sun Daily, Maybank IB Research has cautioned that the price increase would result in subscribers downgrading or disconnecting their packages due to the current weak consumer sentiment.
Maybank IB Research analyst Yin Shao Yang was quoted as saying the increase of RM8 a month effective Aug 1 should translate into a RM1.60 gain in FY17 (fiscal year 2017) average revenue per user (ARPU).

Nonetheless, he said this price increase would not lift FY17 ARPU significantly considering the current market situation.

“In fact, we gather that it may be counterproductive in assisting Astro achieve its target of nil net Pay-TV additions in FY1/17,” the Sun Daily quoted him as saying.

He added that the last price hike of RM5 for HD products in December 2014 was not so well absorbed as Q1’FY16 ARPU was a flat quarter on quarter (q-o-q).

He said the Q1’FY16 churn rate had inched up 40 basis points q-o-q as subscribers either downgraded or disconnected their packages as a result.

The report said that Astro lost 46,000 pay-TV subscribers before the price increase.

In the near term, Astro Sports Pack subscribers will be entitled to 60 days preview of OD Plus, Astro Cricket and Setanta Sports Channel from July 16 to Sept 16 as compensation. In the long term, two new sports channels (eGG Network and BeIn) will be added to the Sports Pack and two existing sports channels (Astro Super Sports 4 and Astro Arena) will be made available in HD, according to the report.

The Sun Daily report quoted Yin as maintaining a “hold” call on Astro with a target price of RM2.75.