The details of Astro-Maxis IPTV. Both Astro and Maxis have unveiled their joint IPTV packages in late April. While Maxis maintained its broadband prices that range between RM148/month for 10 Mbps to RM248/month for 30 Mbps packages, its IPTV partner - Astro has introduced a few TV content deals to cater for different users. Apart from selecting the appropriate broadband package from Maxis, a Maxis-Astro IPTV subscriber also has an option to opt for either the Superpack (with a minimum subscription fee of RM125/mth), Value Pack (RM75/mth) or Family Pack (RM37.95/mth) selections. On top of that, the subscriber also has an option to pay RM20/mth and subscribe for a home voice package worth RM30/mth in call limit (Please refer to table 1-3 for further details).

Minimum discount in contrast to TM’s Unifi VIP 10 package. Assuming a budget subscriber is interested to subscribe for the Astro-Maxis IPTV service, the lowest price that the subscriber needs to fork out is RM185.95/mth (Maxis 10 Mbps package + Family Pack, which is the most basic TV contents package provided by Astro). This would be a 6.6% discount as compared to TM’s Unifi VIP 10 (10Mbps/mth) package that provides the exact same broadband speed. Nevertheless, we believe that the real challenge will be in TM’s Unifi VIP 5 package rather than other plans given that more than 85% of its current Unifi subscribers are in this category.

Head to head competition with TM’s Unifi. We believe the Astro-Maxis IPTV deals may provide a real competition to TM as the latter’s Unifi service cheapest broadband package – VIP5 (5 Mbps for RM149/mth) is still 50% lower in terms of broadband speed despite it being priced at a similar quantum as Maxis. As a result, there is a need for TM to consider either upgrading the broadband speed (from 5Mbps to 10Mbps) or further customising its TV contents in order to be competitive. According to Astro, 1.1m (or 85%) of the current HSBB home premises are on Astro’s subscribership. Thus, TM will likely face a challenging time should the company continue to maintain its lacklustre TV contents that are bundled with its current Unifi packages. We understand that 42% or 203k TM’s Unifi subscribers from its current 483k customer base (as of 4QFY12) are due to renew their 2-year contract in CY13.

Earnings impact to TM and Maxis. At present, there is no change in our TM’s FY13-FY14 earnings forecasts. We are maintaining our TM’s Unifi subscribers net adds assumptions at 180k each for both FY13 and FY14 with ARPU assumptions of RM177 and RM174 in the respective financial years. Meanwhile, we are lowering our Maxis’ FY13 net profit by -1.5% after lowering the group’s FTTH subscribers net adds to 99k with an ARPU of RM139 (from 156k and RM145 previously), bringing the total FTTH subscriber base to 125k by the end of FY13. Similarly, our Maxis’ FY14 earnings estimate has been reduced by -0.9% after imputing in a lower ARPU (RM121 vs. RM147 previously) although we have maintained the subscribers net adds at 204k. We understand that Astro is eyeing to register c.60k-70k and c.170k-180k IPTV subscribers in CY13 and CY14 respectively. ARPU-wise, we understand that Maxis will only receive a 75% broadband ARPU under the Maxis-Astro IPTV plan.

Source: Kenanga