Astro’s possible re-listing to involve domestic business, could raise RM4.6bil

Dispute won’t derail IPO


ASTRO All Asia Networks Plc's ongoing wrangle with Indonesian conglomerate Lippo Group is not likely to affect the planned re-listing of the country's largest pay-television broadcaster, said media analysts contacted by StarBiz.

They said any possible initial public offering (IPO) would only involve the domestic business of Astro.

“This is based on media reports of the planned IPO, which quoted sources as saying Astro could raise about US$1.5bil (RM4.6bil) in an IPO by as soon as the end of the year. Looking at the size of such an IPO, the re-listing should not involve Astro's overseas operations,” they said.

Kenanga Research said in a note that the possible IPO size of RM4.6bil for Astro was about half or 54% of the RM8.5bil privatisation exercise by tycoon T. Ananda Krishnan and Khazanah Nasional Bhd two years ago.

To recap, in 2005, Astro had entered into a joint venture with First Media and other affiliates of the Lippo Group to set up a direct-to-home (DTH) pay-television business in Indonesia to be launched by PT Direct Vision, a subsidiary of First Media.

However, the joint venture was not concluded, and subsequently Astro commenced arbitration proceedings against Lippo Group under the Singapore International Arbitration Centre Rules to recover about US$560mil (RM1.7bil) which it had incurred to establish the pay-TV business for PT Direct Vision.


Reports say Astro could raise about RM4.6bil in an IPO that is expected as soon as the end of the year.
In February 2010, the tribunal in Singapore awarded Astro US$300mil (RM909mil) in damages, interest and costs but no part of the award has been paid by Lippo.

One media analyst said: “If the IPO includes the overseas operations, the valuation for Astro might not be that rich as the business risks are higher. From what we understand, the overseas operations seem to be having some issues.”

Another analyst concurred, saying that the rationale for Astro's de-listing in June 2010 included the volatility of the overseas operations.

For the financial year ended Jan 31, 2010 (FY2010), Astro recorded a 10% growth in revenue to hit a record RM3.3bil and stated that this was driven by increasing demand for pay-TV services in Malaysia.

Net profit was RM233mil compared with a net loss of RM529mil in the previous financial year.

In its 2010 annual report, Astro said the much welcomed recovery followed two years of reporting losses that largely arose from accounting for costs associated with the termination of pay-TV services in Indonesia.

Meanwhile, OSK Research said in a recent report that its check with sources indicate that re-listing plans for Astro are being mooted, with timing being a key consideration.

“We think Astro's re-listing could take on a similar route with its sister company, Maxis Bhd, and fast-tracked,” said the research house, which pointed out that Maxis was re-listed in December 2009, two years after being taken private by Ananda Krishnan.

The research outfit also said it gathered that Astro's subscriber base had surpassed three million as at end-2011, cementing its lion's share of the six million pay-TV households in the country.

“Astro's re-listing is timely as it is seeing inbound competition from telecommunications companies, which are offering triple-play products and cable pay-TV operator Asian Broadcasting Network (ABN).”

It said a re-listing of Astro could reignite talks of a union with Maxis, given the potential longer-term term synergies under a converged landscape.

“Both companies share a common shareholder which may be looking to streamline its media and telecommunication businesses in Malaysia,” it added.

It was noted that Astro was looking at ways in which its service could reach out to more customers across multiple platforms and was toying with cloud services while Maxis was transforming itself to be an integrated telecommunication player with bundled offerings.

However, another analyst said this was unlikely to happen.

“Yes, there would be content synergies from such a union. But Astro is more than big enough to list on its own. We do not think such a corporate union would happen,” he said.

Astro began operations in 1996, and according to its website, currently broadcasts over 119 pay-TV channels in four major languages across Malaysia and Brunei to more than 2.93 million households.

The group also operates eight FM terrestrial radio stations in Malaysia that cumulatively reach close to 11 million listeners a week or 72% of total radio listeners in the peninsula and command a substantial 57% of the radio industry's advertising expenditure.