Clampdown on Android TV box would boost lacklustre media sector, especially Astro

-A +A

KUALA LUMPUR (Feb 7): The government’s plan to ban Android TV boxes would be a positive catalyst to the lacklustre media sector, especially for Astro Malaysia Holdings Bhd, given the continued effect of digital disruption, says Hong Leong IB Research (HLIB). 

It was recently reported that the Malaysian Communication and Multimedia Commission (MCMC), together with Domestic Trade and Consumer Affairs Ministry, is considering banning the sale of Android set top boxes (STBs) in Malaysia, mirroring Singapore’s similar move last month.

Apart from that, both bodies are cracking down on the unauthorised websites that offer illegal streaming. 

In a note today, HLIB explained that the sale of Android STBs have been growing rapidly in the last 2 to 3 years as a cheaper streaming alternative, which has hampered the development of Pay-TV in Malaysia.

“In Malaysia, Astro Malaysia Holdings Bhd appears to be the most impacted player with the rapid sales of Android STBs, as evident by its declining premium subscribers in the past 3 years. However, we note that Astro has managed to slowdown the subscriber loss with NJOI,” it said.

Should the ban materialise, HLIB notes Astro would be a beneficiary as this could possibly put a halt (or at least slowdown) to its declining premium subscriber base and possibly lift its average revenue per user (ARPU) (currently at RM99.90).

However, it said despite the ban on Android STBs, Astro would still face competition from legal streaming platforms, such as Netflix.

Regardless, another good news for Astro would be that Telekom Malaysia Bhd (TM) announced their latest Unifi package would not be bundled with Unifi TV subscription, due to changing consumer trends.

“We view the news as a positive for Astro, as this could assist Astro to expand their subscriber base. Astro controlled 77% market share of Pay-TV market in Malaysia and the rest is controlled by TM through Unifi TV,” HLIB said.

HLIB maintains Underweight rating on the media sector.

“Following the recent surge in Astro share price, we downgrade Astro from Buy to Hold, with an unchanged Target Price of RM1.70. Nevertheless, Astro’s earnings prospect remain intact on the back of its stable advertising expenditure outlook and coupled with generous dividend payment of 5% yield,” it added.

At 10.41am, Astro rose 0.60% or 1 sen to RM1.67, with 518,400 shares traded.