ASTRO is optimistic that its new plans with ‘lower price floor’ of RM40-RM60 per month will be well received. Moreover, it said these affordable new products will enable the group to expand its market reach and broaden its addressable advertising market. The introduction of these plans takes into account the recent decline in average disposable incomes among Malaysians.
In spite of the introduction of cheaper packages, it is confident that its ARPU will remain resilient. This is underpinned
by expectations of improving sales traction for its broadband bundles.
Whilst it is still early days, ASTRO is encouraged by the promising uptake for Sooka as awareness ramps up that may provide tangible contribution to earnings in the future.
In analysing the satelite broadcasters latest move, investment house Kenanga anticipates future weakness in ASTRO’s adex, given the sustained decline of its TV viewership. Moreover, both advertisers and customers may increasingly favour digital music streaming platforms such as Spotify and Apple Music. The latter leverages on artificial intelligence (AI) to offer personalized content and targeted commercials.
Hence, this enhances the overall customer experience, whilst ensuring effective advertising. The house is not so optimistic on Astro and cuts its FY25F earnings by 5% to reflect the lower ARPU following the introduction of cheaper packages. In addition, Kenanga introduced its FY26F numbers and cut its terminal growth rate assumption to 0% (from 1%). This it said is to reflect the deteriorating outlook on long-term earnings. As a result, the overall TP based on DCF is lowered by 19% to RM0.27 (from RM0.33).
Kenanga said it remains cautious on ASTRO due to fierce competition from OTT streaming platforms and FTA TV,
bloated cost base that includes legacy expenses (e.g. ongoing payment of transponder lease costs to MEASAT Satellite), and
competition from digital music streaming platforms that leverage on AI to offer personalized content and targeted
commercials. Maintain UNDERPERFORM
