Astro Malaysia expects subscribers and advertisers to spend more this year
By Goh Thean Eu March 29, 2017
- Pay-TV subscriber base fell 2% at 3.67 million, NJOI base jumped 30% at 1.65 million
- Expects content costs to be at 34-35% of TV revenue this financial year, no plans to increase subscription fees
From left: CEO of Tribe and Raku Iskandar Samad, Astro Malaysia group CEO Rohana Rozhan, group CFO Shafiq Abdul Jabbar, and chief commercial officer Liew Swee Lin, showcasing Astro Malaysia’s digital-first products and services after its FY17 results press conference.
ASTRO Malaysia Holdings Bhd, the country's dominant pay-TV operator, expects stronger earnings performance this financial year, as it generates more revenue from its subscribers and advertisers.
The company, controlled by Malaysian tycoon Ananda Krishnan, reported a 1% growth in net profit at RM624 million (US$141.4 million).
For the full year ending January 31, 2018, the company expects net profit to grow by high single-digit percentage. (RM1 = US$0.23; US$1 = RM4.41)
Growth will be driven by a few factors. First, it expects NJOI - its subscription-free TV service - to grow in terms of subscriber base and amount spent*. (*Although NJOI subscribers are not bound to any monthly fees, they can purchase TV contents on a prepaid basis)
Second, it expects more of its pay-TV subscribers (those who subscribes to monthly packages) to take up value-added products. For the fourth quarter ended January 31, 2017, its average revenue per user (ARPU) rose to RM100.40, from RM99.30 a year ago, and RM93.20 four years ago.
"This year, our strategy is to defend our pay-TV base by offering them more value-added products.
"We are also targeting to grow our NJOI base by about 400,000 this year," said Astro group chief executive officer Rohana Rozhan during a media briefing in Kuala Lumpur yesterday.
She further added that the higher ARPU by its subscribers will be mainly driven by its value-added products, as there are no plans to increase subscription fees this year.
As at end January 31, 2017, the company's pay-TV and NJOI services are consumed by over 5.1 million household (1.65 million NJOI customers; 3.47 million pay-TV subscribers) -- representing a household penetration of 71%.
"By end of this (financial) year, we are targeting to achieve 75% household penetration," Rohana added.
Besides banking on its customers' wallet, Astro is also expecting brands and companies to spend more on advertising on its TV and Radio platform.
During the full year ended January 31, 2017, the company's advertising revenue rose 10% to RM705 million -- significantly outperforming Malaysia's gross Adex growth of 2% (for TV) and 5% (for radio).
A good result overall
During the financial year, the company's revenue rose by 2% at RM5.61 billion (US$1.27 billion). This is slightly lower than the 3% growth it initially targeted.
Nevertheless, Rohana is encouraged by the results.
"I am pleased with our results. Last year was an extremely soft year. Despite the soft market space and soft consumer sentiment, we still managed to grow," said Rohana.
"A lot of that is driven by our customers enjoying our contents."
The year also saw the company's pay-TV subscriber base declined by 2% at 3.47 million, from 3.55 million a year ago. Rohana attributed the lower pay-TV base to the softening consumer sentiment.
During the financial year, the company spent over RM1.79 billion on contents -- including rights to broadcast sports events, movies and others. The amount represents about 35-37% of its TV revenue.
The amount spent is significantly higher than the year before, partly due to two reasons -- the strengthening of the greenback and the cost of broadcasting key sporting events like Euro 2016 and the Olympics.
"This year, we expect content costs to be about 34-35% of TV revenue," said Rohana.