- TM entered into an agreement with Astro Malaysia’s unit, Measat Broadcast Network Systems Bhd (MBNS) for the broadcast of Astro SuperSport and Astro SuperSport 2 HD channels on HyppTV for 3 years, starting from 1 August 2013 until 31 July 2016.

- This includes selected live matches from the Barclays Premier League’s Seasons 2013/14, 2014/15 and 2015/16, as well as other premium sports content. In addition to the two channels, the parties have also agreed to enter into an agreement for the broadcast of selected NJOI channels, subject to certain conditions.

- HyppTVs “pay for what you want” strategy i.e. subscribers select the exact channels that they want vs. Astro’s typical bundling strategy for their channels may give HyppTV an advantage. Currently, HyppTV’s channel pricing range from between RM3/month to RM15/month (HyppTV sports channels are priced at RM9 –RM15/month), while in comparison, Astro IPTV subscribers need to choose from one of Astro’s Superpacks (priced at RM125-155/month) to include Astro’s Sports Package as part of the bundling.

- While we recognise that Astro’s sports channels entail huge following (we estimate circa 70%-80% of Astro’s subscribers subscribe to its sports package (comprising 14 channels including duplicate channels in HD format), primarily because of the BPL matches that it airs - getting to watch select matches is perhaps, akin to watching a “Desperate Housewives” series which comprise 8 episodes, but only getting to watch Episode 2, Episode 5 and Episode 7 of the series.

- We remain conservative on the potential impact on HyppTV’s viewership as despite a potential advantage in pricing/bundling strategy, customer experience will be somewhat, different and at a disadvantage. Furthermore, given that Unifi’s coverage is currently in areas comprising the middle income class (Klang Valley/Iskandar region), customers would naturally be less price elastic.

- Having said that, the improvement in scale from the offering of HyppTV on 4mbps and 8mbps packages should help TM improve its ability to offer more attractive contents going forward. Maintain HOLD on TM at unchanged DCF derived fair value of RM5.40/share.  

Source: AmeSecurities