TM to benefit from stronger data and Internet business

KUALA LUMPUR: The competition within the IPTV space is getting stiffer and the TM group is expected to benefit due to its strategy to build up its Internet and data businesses, said an analyst.

Jeffrey Tan, in his OSK Investment research note, said TM's Unifi is adding more subscribers with no sign of slowing down despite a competing product from Maxis.

"We do not rule out TM procuring more compelling content to shore up interest on its IPTV product in driving Unifi's next leg of growth as broadband becomes increasingly commoditised," he said.

TM recently added fresh content to HyppTV, its IPTV service offered together with Unifi, which continued to experience solid take-up.

It has targetted 400,000 Unifi subcribers by the end of this year but to date, it has achieved 80 per cent of that target.

"In view of the stronger than expected subscriber growth for Unifi, we are raising our Unifi subscriber projections for 2012 and 2013 by 26 per cent and 24 per cent respectively," he said.

TM, said Tan, has a strong balance sheet and an expanding cash hoard from peaking high-speed broadband investments to mount a challenge if it decides to bid for content monopolised by Astro.

"Acquiring fresh content would allow TM to progressively expand its household average revenue per user (Arpu) through up-selling or more premium service," he said.

This, Tan pointed out is key to TM getting more subscribers over the longer term in the face of stronger competition from existing and new players.

Existing players include P1 which recently launched its new fibre plans, the second company after Maxis to do so, and P1's entry level 5Mbps plan is priced at RM169 per month, a slight premium to Unifi's RM149.

Competing in the TV content space especially with Astro will be new player, the Asian Broadcasting Network (ABN), which is expected to launch its pay-TV service in the second quarter of 2012 and it targets half a million subscribers within the first year of rollout.

"We gather from industry sources that ABN has signed up about half of the 100 channels that it intends to offer when the service goes live," said Tan.

Another potential threat is YTL Communications, which was reported to be targeting an IPTV product based on a partnership with Sezmi Corp, a US pay-TV operator.

Tan said OSK keeps a "buy" call on TM based on higher fair value of RM5.90 (previously RM5.70) following the two to four per cent upgrade to its FY12/13 forecasts.