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Nikkei Markets

Astro Malaysia's 1Q net profit falls amid revenue slippage

Higher content cost clouds outlook while company aims to expand subscriber base

Company logo of Malaysia's pay-TV firm Astro at its headquarters in Kuala Lumpur
Astro will be broadcasting live the 2018 FIFA World Cup, Commonwealth Games, Jakarta 2018 Asian Games and the 2018/2019 Premier League season.   © Reuters

KUALA LUMPUR (Nikkei Markets) -- Astro Malaysia Holdings, a pay-television operator, said Wednesday net profit fell 10.8% in the fiscal first quarter from a year earlier due to higher net finance cost.

Net profit for the three months ended Apr. 30 totalled 174.73 million ringgit ($43.99 million) compared with 195.82 million ringgit in the same quarter last year, Astro said in an exchange filing. Quarterly revenue edged 1.1% lower on year to 1.31 billion ringgit from 1.33 billion ringgit.

"We entered this financial year cognizant of the dissipating tailwinds in consumer businesses," said Chief Executive Rohana Rozhan. "Advertising-funded models and the trend towards unbundling are now precipitating a gradual re-rating of value perception and giving them cheaper alternatives."

Astro Malaysia is anticipating content cost to rise about two-percentage points this year due to major sporting events. This year, Astro will be broadcasting live the 2018 FIFA World Cup, Commonwealth Games, Jakarta 2018 Asian Games and the 2018/2019 Premier League season.

At a time when advertisement spending across most media in the country is shrinking, Astro is seeking to expand its subscriber base, capture higher-paying customers, and boost home shopping business, capitalizing on its virtual pay-TV monopoly in Malaysia.

Revenue from television, from which it derives the bulk of its profit, slipped 3% in the first quarter mainly due to lower package take-up. Radio segment's revenue fell 6% due to lower advertisement spending. Total advertising expenditure, or adex, grew 6% year-on-year to 151 million ringgit.

Home-shopping's revenue, however, gained 35% on year driven by "tactical campaigns executed" for the quarter, the company said.

Average revenue per residential subscriber of its pay-TV service fell to 99.60 ringgit a month from 100.8 ringgit. The company had 16.5 million radio listeners at the end of April.

Moving forward, Astro said it expects to encounter some revenue challenges amid the global trend of structural change in the media industry. The company is cushioning it against revenue diversification efforts and cost initiatives, it said.

Still, the company will continue to remain "cash-generative and will focus on investing in growth strategy," Astro added.

Separately, the company said it has not received confirmation of any proposal to take the company private. The response comes a day after Bloomberg reported major shareholder billionaire T. Ananda Krishnan was mulling to take Astro Malaysia private after company's shares slipped to a record low.

Shares of Astro rose 14% to 1.83 ringgit ahead of the release of the financial results, while the benchmark FTSE Bursa Malaysia KLCI edged 1.3% higher.

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