Caution over effect of Astro sports package price hike

PETALING JAYA: Maybank IB Research cautioned that the price increase for Astro Malaysia Holdings Bhd’s sports package will see subscribers downgrading or disconnecting their packages due to the current weak consumer sentiment.
Its analyst Yin Shao Yang said the increase of RM8 a month effective Aug 1 should translate into a RM1.60 gain in FY17 average revenue per user (ARPU).
Nonetheless, he believes this price increase will not lift FY17 ARPU significantly considering the current market situation. “In fact, we gather that it may be counterproductive in assisting Astro achieve its target of nil net Pay-TV additions in FY1/17,” he said.
He added that the last price hike of RM5 for HD products in December 2014 was not so well absorbed as Q1’FY16 ARPU was flat quarter on quarter (q-o-q) and Q1’FY16 churn rate inched up 40 basis points q-o-q as subscribers either downgraded or disconnected their packages as a result.
Worth noting is that Astro lost 46,000 pay-TV subscribers in Q1’FY17, which was before the price increase.
In the near term, Astro Sports Pack subscribers will be entitled to 60 days preview of OD Plus, Astro Cricket and Setanta Sports Channel from July 16 to Sept 16 as a compensation. In the long term, two new sports channels (eGG Network and BeIn) will be added to the Sports Pack and two existing sports channels (Astro Super Sports 4 and Astro Arena) will be made available in HD.
Yin is maintaining a “hold” call on Astro with a target price of RM2.75.