- TM launched HyppTV Everywhere for Digi earlier this week. HyppTV Everywhere for Digi is essentially another variant of the existing HyppTV Everywhere offering which has been around for more than a year.

- HyppTV Everywhere is basically an extension of the Set Top Box-based HyppTV offering that allows subscribers to watch HyppTV via other online mediums such as tablets, smartphones and PCs. HyppTV for non-Unifi subscribers was made available recently with different charges depending on the channels/videos opted on an alacarte basis. HyppTV Everywhere currently has a subscriber base of 150K (circa 20% of total Unifi subs base) with an estimated ARPU of between RM5-10 (this is based on our estimate).

- What is different with the HyppTV Everywhere for Digi offering is that a different portfolio and differently priced packages are offered. Additionally, Digi is giving away promotional zero data charges for HyppTV Everywhere for Digi streaming up till end June. HyppTV Everywhere for Digi uses a standalone application developed specifically for Digi subscribers.

- Management was tightlipped about revenue share for the deal but generally, we believe the bulk of TM’s revenue would come from the HyppTV content provision and Digi from bandwidth provision. Five packages are available, priced at RM10.60/month and RM15.90/month (for the sports package).

- The deal is positive in driving data traffic for Digi as video streaming consumes high bandwidth (circa 250MB/hour for non-HD and 2GB/hour for HD) compared to other popular applications that subscribers currently use e.g. social networking, web browsing, music streaming and YouTube streaming (See Exhibit 1).

- As of 4Q14 (which recorded the highest data traffic for Digi so far), we estimate the average monthly data consumption/internet user at circa 0.8GB/month. Every minute/month of incremental IPTV or video streaming can drive the average data consumption by some 0.5%, on our estimate, assuming takers of the products are existing internet users.

- For TM, the incremental revenue would likely come from the content charges. This could range between RM10-15/month/subscriber based on packages offered assuming TM takes 100% of content revenue.

- The move is positive for TM in increasing the reach and scale of its IPTV business (which is a key weakness for TM vs. Astro) considering the 37mil mobile subs vs. <1mil Unifi/HSBB users. However, Astro also has its own mobile based IPTV i.e. Astro-On- The-Go, which currently entails around 1.4mil subscribers (circa 30% of total Astro subscribers). Maintain HOLD on TM (FV: RM7.20/share) and Digi (FV: RM6.50/share).

Source: AmeSecurities Research - 16 Apr 2015