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Astro on the likely path to grow revenue to RM8.8bn in FY22 propelled by adex

According to research by CIMB, following Astro’s Investor & Analyst Day, Astro aims to grow its revenue from RM5.6 billion during the financial year ending 31 January 2017 (F1/17) to RM8.8 billion by FY22. The report said this will be driven by stronger advertising expenditure, especially in digital, as well as new initiatives such as 24-hour home shopping TV channel Go Shop, online video service Tribe, licensing income and other ancillary income, said the company.

The company can expects stronger earnings recovering in FY18, following an 8% advertising expenditure growth and higher average revenue per user (ARPU) of RM102 per month, propelled by the revision of its sport package price and higher acceptance of value-added services.

The note also stated an expected increase in Go Shop’s revenue from RM260 million in F1/17 to RM1.9 billion in FY22, following a growing customer base, additional “live” shows on Go Shop channels, as well as a better combination of products with higher volume and margin. Astro plans to increase the existing customer base from 1 million to 6 million customers, as it expects the Malaysian e-commerce market to reach US$2.9 billion in 2020. It also intends to increase the number of hours of “live” shows on Go Shop channels, as sales and viewership tend to be higher compared to recorded shows.

In a bid to capture growth in new segments such as Nusantara, a satellite TV service in Indonesia, and eSports, the company also intends to boost spending on local language and ASEAN content by 50%. These segments not only offer monetisation potential outside of Malaysia, but also differentiates Astro from competitors, as well as potentially targets Millennials and children.

Astro is also targeting Millennials and lower-income individuals with its freemium over-the-top (OTT) service NJOI Now, which allows non-subscribers of Astro’s pay TV and NJOI services to purchase¬†their desired content. This is as opposed to the traditional pay TV style of bundling channels. Additionally, NJOI Now will soon feature live sports programmes, beginning with the 2017 SEA Games, potentially targeting “cord cutters” or those without an Astro subscription.

While some may think that TV is dying due to the rise of digital media, Astro’s management refuted that notion by saying its Malaysian TV household viewership share grew from¬†43% in FY1/13 to 57% in FY1/17 to a total of 13.9 million daily viewers.

 

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