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Astro defends its pay-tv turf through partnership

KUALA LUMPUR: Astro Malaysia Holdings Bhd has tied up with sister company Maxis Bhd to defend its pay-tv turf by offering an alternative to broadband and home voice services.

Launched on Tuesday, the 10-year strategic partnership will see the companies developing and co-marketing Astro’s B.yond internet protocol television (IPTV) and Astro On-The-Go together with Maxis’ internet services.

This will cater to the 1.4 million home pass (homes with broadband access) by providing them with an option to purchase bandwidth from Astro B.yond IPTV as an alternative to Telekom Malaysia Bhd’s Unifi broadband-IPTV-voice bundle.

“About 1.4 million households have fibre broadband passing through their homes and it is therefore our challenge to put together a proposition that allows consumers to not only pick up TV channels from us, but also purchase broadband,” said Astro CEO Datuk Rohana Rozhan at the Astro B.yond IPTV launch.

She added that since 1.1 million of these households are already Astro subscribers, the partnership would provide them the opportunity to experience a single billing system for Astro B.yond IPTV and Maxis internet.

“Since the announcement, we have worked to put the foundation in place leading to this launch, which includes development and integration of our operational process for a single billing system of Astro B.yond IPTV and Maxis internet,” said Maxis chairman Raja Tan Sri Arshad Raja Tun Uda.

The partnership would entail Maxis being appointed as the fibre broadband service provider to expand Astro’s B.yond IPTV service footprint. Meanwhile, Astro will be the IPTV service provider for all Maxis’ fixed and wireless platforms.

On the Astro B.yond IPTV-Maxis packages being offered, Rohana said existing customers can choose broadband bandwidth of 10, 20, 30Mbps and enjoy savings from RM53.30 per month.

She added that this would mean access to 168 channels with 71 local channels, 34 high definition (HD) channels and various foreign screenings as well.

The win-win collaboration, first announced last September, is also said to provide greater value for the stakeholders of Astro and

Maxis through the offering of high speed fibre broadband and home voice services.

Both Astro and Maxis are majority owned by billionaire T Ananda Krishnan.  

According to a RHB Research report in March, the partnership is expected to yield positive earnings for Astro, leading to the research firm to upgrade the stock to a “buy” call.

“We believe that the IPTV package will not only drive higher average revenue per user (ARPU) through various product offerings but also increase earnings margin due to lower transmission cost,” said RHB.

The research house added that the growth in pay-TV adex and the group’s tie-up with Maxis may enhance its prospects and boost its future outlook.

Meanwhile Maybank Investment Bank Research in its March report said that it is of the view that Astro’s B.yond IPTV “will likely give TM (Telekom Malaysia) a run for its money”, adding that consumers would consider taking up Astro’s package due to the better value.

“Currently, Unifi residential subscribers are locked into a two-year contract, [however] we believe that they will seriously consider the Maxis-Astro IPTV product once their lock-in period expires, because the product offers better value than if they were to subscribe to Unifi and Astro via DTH (direct-to-home) separately,” said Maybank in the note.

It also noted that the partnership would provide Astro a greater customer base reach compared to via its existing tie up with Time dotCom Bhd.

“The Time fibre network has passed only 100,000 out of its targeted 167,000 households, while the High Speed Broadband Network which Maxis utilises has already passed 1.37 million households.

It reasoned that while the partnership will have lower margins, this will be more than compensated by a wider reach.

This article first appeared in The Edge Financial Daily, on May 2, 2013.

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