As reported by various media, Astro All Asia Network(ASTRO), Malaysia's largest paytelevision broadcaster owned by Tan Sri AnandaKrishnan, has been approached by investment bankers about a possible share saleand Initial Public Offering. It is said that ASTRO could raise about USD1.5bn(RM4.6bn) in an IPO as soon as  the  end of this year.

Privatised in 2010. To recap, ASTRO was taken private byAstro Holdings (AH) on 14 June 2010, which already  owned 72.91% prior tothe  privatisation. Note that AH  was formed by billionaire Ananda Krishnanwith 42.34%, Khazanah with 21.39%, EPF with 8.61% and Tun Mohammed Hanif Omarwith 9.81%. At the privatization price of RM4.30 per share, the share waspegged at 30x 1 year forward PER and 9x EV/EBITDA.

Potential valuationof ASTRO. Looking back at what Ananda Krishnan has done on the  relisting of Maxis, we believe ASTRO willstrip off  the 20% stake held in itsIndian asset, SunDirect TV, the largest Direct-to-Home pay  TV in Indiawith household subscribers of 5 million, which reported core losses of RM100mp.a in 2010, prior to the IPO. Thus, stripping off this asset, we estimateASTRO could make a PBT of RM530m. Assuming ASTRO's Malaysia operation makesabout RM450m p.a and assuming a PE of 25x, the potential market capitalizationof ASTRO could be as big as RM11.25bn. Without its overseas operation, ASTRO isactually a cash cow, with EBITDA of about RM750m-800m. Also, with 4.1msubscribers back in 2010 and given Malaysia has only 6.5m households, we expectits subscriber's growth to stabilize  at the mid single digitlevel.

Boosting his cashpile here  for India? We believeshould the IPO materialize, it will primarily involve  an offer for sale of existing shares based on what we saw in Maxis'relistingback in 2010. This jives well with the rumors that Tan Sri Ananda Krishnan is beefingup his cash hoard following the sale of Pan Malaysia Pool and his Power Assets to1 Malaysia Development Berhad. We believe the billionaire would likely ploughback his cash into his existing telco business in India especially given theongoing legal suit filed by India's Central Bureau of Investigations

Sector re-rating.Should ASTRO make a comeback to the local bourse, we believe it will be a majorre-rating for the Media sector given that it could emerge as the largest Mediastock in Malaysia with an estimated market capitalization of more than RM10bn. Wesee Media Prima (BUY, FV RM3.01) as the likeliest candidate to have a potentialupward rerating since it is the closest peer to ASTRO, and is the currentsingle largest listed media company within the free-to-air television segment.