This article first appeared in Corporate, The Edge Malaysia Weekly, on July 18 - 24, 2016.

AT least three listed media groups have submitted bids to operate advertising space at the mass rapid transit (MRT) project, industry sources say. These players are in the indoor and outdoor advertising business.

“It is an exciting project. We are talking about over 50km of new advertising space opportunities across 31 stations. It is a 10-year contract. Everyone who is in the indoor and outdoor advertising space is eyeing it. The bidders include Big Tree (Outdoor Sdn Bhd), Redberry (Sdn Bhd) and Seni Jaya (Corp Bhd),” says an industry source.

“The deadline to bid closed last month and the contract is expected to start at the end of the year when the MRT starts operations,” notes the source.

When contacted, an MRT Corp spokesman declined to comment, saying: “It is the evaluation period now, so I cannot reveal any information as evaluating the bids is strictly confidential.”

The industry sources say some of the local bidders have tied up with foreign players that have metro and transit media advertising experience.

While it is unclear whom these international entities are, an industry player notes that Thai media groups such as VGI Global Media and Plan B Media have met up with Malaysian outdoor players in recent months to discuss partnerships.

Thai-listed VGI Global Media does the outdoor advertising for Bangkok’s mass transit system, the BTS. Meanwhile, Plan B Media does transit media advertising for the metro system known as the MRT in Bangkok.

The Edge has learnt that local companies that specialise in the outdoor media advertising business but do not have experience in metro advertising or transit media advertising can participate in the bidding process by entering into a joint venture with an international partner that has such experience.

Sources say that it is mandatory for the bidding company, consortium or joint venture to have at least five years’ experience in out-of-home (OOH) advertising media operations and maintenance. Industry sources say the parties should also have at least three years’ experience in operating and maintaining transit media advertising and meet the 30% bumiputera equity requirement.

Asked for their opinion of this new advertising opportunity, analysts say it is good news for media players. “It is big money. The margin for outdoor advertising is about 30% to 40%. It is one of the best margins in the media business platform,” says a media analyst with a bank-backed research house. “On top of that, outdoor and indoor advertising contracts are long-term concessions. So, players can lock in the contracts for a longer term.”

Big Tree, the outdoor advertising operator for the light rail transit (LRT), is under Media Prima Bhd, which has businesses across the print, radio and television media.

Big Tree operates the transit advertising business that covers the LRT lines under RAPID KL, the Express Rail Link connecting KLIA and KL Sentral as well as the KL Monorail.

Media Prima’s outdoor advertising business saw its earnings rise 6% year on year to RM36.6 million for FY2015, making up 26.3% of the media group’s segment profit after tax and before allocating to non-controlling interest of RM138.7 million. Revenue from that segment grew 6.2% y-o-y to RM157.2 million, driven by new digital rollouts at key and premium sites throughout FY2015. Dividends received and receivables net of tax from Big Tree for FY2015 was RM30 million, 50% higher than the RM20 million in FY2014.

Meanwhile, Ancom Bhd’s media business — Redberry — is in the outdoor advertising segment through Redberry Outdoor and its 75%-owned Meru Utama Sdn Bhd, which owns exclusive rights to advertising mediums at Kuala Lumpur International Airport and klia2. It is in the transit media business through its advertising sales concession for Rapid buses in Kuala Lumpur and Penang.

The media division posted a profit of RM7.5 million in FY2015 — compared with RM1.3 million in FY2014 — towards Ancom’s earnings.

Listed indoor and outdoor advertising company Seni Jaya’s business includes advertising rights on the 40km Lebuhraya Damansara-Puchong highway and the transit advertising business through its exclusive marketing agent services in Malaysia for Singapore Bus Services Pte Ltd on SBS buses in Singapore.

For the financial year ended Dec 31, 2015, Seni Jaya saw its revenue and net profit drop marginally. Its revenue fell 1.05% year on year to RM20.64 million while its net profit decreased 5% to RM1.32 million.

PricewaterhouseCoopers (PwC) released its Global Entertainment and Media outlook last month, predicting that OOH advertising revenue is set to continue to grow at a compound annual growth rate of 4.3% and will reach US$42.74 billion in 2020.

“While increasing revenue from internet-connected digital OOH will be the main engine of growth, traditional formats — unlike many other segments — are holding their ground, with physical OOH revenue set to remain steady,” PwC adds.

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