- Astro Malaysia’s unit, Measat Broadcast Network Systems Bhd (MBNS), has entered into a Channel Supply Agreement with Telekom Malaysia’s TM Net Sdn Bhd (TMNET) for the broadcast of two Astro SuperSport channels on HyppTV.

- It was announced that TMNET will be granted the non-exclusive right to distribute Astro SuperSport HD and Astro SuperSport 2 HD Channels to its HyppTV subscribers 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.

- StarBiz reported that in the preceding 12 months, transactions between TM group and Astro was about RM28.5mil.

- We view that this would have little impact on Astro’s viewership and its advantage derived from its exclusive contents, as Astro has 14 sports channels to date, offering a wide coverage of both local and international live sporting events.

- On the other hand, we are positive on this latest development as we view that this can potentially help Astro bear its high content and broadcasting rights costs.

- Astro’s content costs currently account for about 32-35% of its TV revenue.

- No changes to our estimates on Astro’s earnings for now, as we are unable to ascertain the terms of the agreement at this juncture.

- We maintain our HOLD recommendation on Astro with a fair value of RM3.08/share, based on a 10% discount to our DCF value.  

Source: AmeSecurities