Astro Malaysia Holdings Berhad’s first quarter financial year 2026 (1QFY26) results have significantly missed expectations, primarily due to an ongoing decline in pay-TV subscribers and a sharp pullback in advertising expenditure (adex). This performance has led Kenanga Research to cut Astro’s FY26F/FY27F earnings forecasts by 60% and 56% respectively, lower its target price to RM0.13 from RM0.15, and maintain an “UNDERPERFORM” call on the stock.
The group reported a 1QFY26 core net profit of RM3.5 million, an 86% year-on-year (YoY) decline. This figure accounted for a mere 3% of Kenanga Research’s full-year forecast and 5% of the consensus estimate, largely driven by a steeper-than-expected decline in its subscriber base and adex. The core earnings for 1QFY26 exclude a one-off post-tax unrealized forex gain of RM10 million from the revaluation of transponder lease liabilities.
The company’s topline contracted by 9% YoY in 1QFY26, primarily due to weaker TV subscription revenue. Net video customer losses, encompassing Pay-TV, sooka, and NJOI, widened by 22% YoY, alongside a softer Average Revenue Per User (ARPU) of RM98 (compared to RM99.4 in 1QFY25). The YoY drop in subscribers was mainly attributed to the expiry of complimentary 4-month subscription passes that were introduced in late FY24. The lower ARPU also reflected Astro’s strategic introduction of more affordable entry-level plans aimed at attracting new customers.
Revenue contraction was further exacerbated by a 21% YoY decline in adex across all segments, with radio experiencing a significant 59% YoY drop. Astro indicated that this decline was predominantly driven by reduced marketing spend from large multinational clients (MNCs). Reasons cited include internal cost-cutting measures by MNCs, diversion of adex away from Malaysia entirely or to larger consumer markets like Thailand and Vietnam, and a shift towards lower-cost digital media advertising. This trend reflects subdued consumer sentiment and weaker retail spending amidst a broader cautious market environment, influenced by ongoing tariff wars and geopolitical uncertainties.
Despite lower costs for content (-3% YoY), set-top boxes, and broadband, as well as reduced amortization of intangible assets, the weakness in topline revenue flowed through to the bottom line, resulting in the 86% YoY earnings slide.
In a positive development regarding a previously reported tax dispute, Astro reached a settlement agreement with the Inland Revenue Board (IRB) in April 2025. To recap, in July 2024, Astro was served with Notices of Additional Assessment totaling RM735 million for the years of assessment 2019–2023. Under the terms of the settlement, no penalties will be imposed, Astro will pay a reduced settlement amount of RM115 million, and the group is permitted to fully claim capital allowances on production costs. As these capital allowances exceed current taxable income, the unutilized portion will be carried forward to offset future tax liabilities.
The house slashed its FY26-27F earnings by 60-56% on higher subscriber churn and lower adex at the radio segment.
