Astro achieves RM196mn PATAMI in Q1FY18
Digital transformation programme to drive innovation, scale and efficiency.
Astro Malaysia Holdings Berhad | Result highlights for the first three months of the financial year ending 31 January 2018 (Q1FY18)
- Revenue and PATAMI moderated amidst challenging market conditions
- Revenue -3% y-o-y to RM1.33bn
- PATAMI -3% y-o-y to RM196mnM
- EBITDA -3% y-o-y to RM460mn
- Strong FCF of RM399mn enables first interim dividend of 3 sen per share.
- NJOI continued to drive customer growth
- Total customers +5% y-o-y to 5.2mn.
- ARPU rose to RM100.8, driven by take-up of value-added products and services; and reprice of sports pack
- Registered total Adex of RM143mn
- Continued to gain and lead in share of TV Adex and Radex at 39% and 76% respectively.
Tun Zaki Azmi, Chairman of Astro, said: -
“In a challenging market, Astro is focused on delivering sustainable revenue and profit growth over the long term. Our businesses continued to be cash generative and the Board is pleased to declare a first interim dividend of 3 sen per share.”
Dato’ Rohana Rozhan, Group Chief Executive Officer of Astro, said: -
“We continue to execute against strategies that underpin our growth plans. We are increasing investment into premium and signature vernacular Intellectual Property (IPs), accelerating digitalisation of our core business and growing reach of our connected customers both in Malaysia, and the region. Utilising digital platforms help expand our reach to a greater number of customers by serving individuals, as well as households, and thus lowers our unit cost to serve. During the quarter, we have achieved growth across key customer metrics including content viewership, and on demand consumption.
Building an Immersive Customer Relationship
Astro continues to build on our customer relationship with 71% of Malaysian households comprising 5.2mn households and some 21mn family members, and we are on track to achieve 75% household penetration by year-end. Our nine radio stations remain the most popular network in Malaysia, with 15.6mn weekly listeners while our digital properties attracted 7.5mn unique visitors and 66mn page views.
Keeping up with consumer trends towards digitalisation, Astro GO achieved 1.2mn registered users, and engagement continues to rise on the platform, with users now spending an average of 162 minutes per week on it. We are equally excited with the introduction of NJOI Now, which offers all Malaysians free video streaming access with option to purchase key premium content. We will leverage on the sizable NJOI customer base of 1.7mn and an addressable audience size of 12mn to push take-up of NJOI Now as a mobile extension to their TV viewing experience and to provide a wider individual marketing reach for our advertisers, products and services.
Astro households have also seen 63% y-o-y growth in connected PVRs to 572k and they have cumulatively watched 2.5mn on demand videos. Continuing this positive trajectory of Astro GO, NJOI Now and connected homes will be fundamental to enable us to drive greater engagement, personalisation and immersion across multiple screens, for both linear and increasingly on demand.
Our Content – Achieving Record Viewership
We saw record viewership, particularly in our signature vernacular IPs, which continue to grow from strength to strength. Maharaja Lawak Mega 2017 garnered a record 4.9mn viewership and doubled its digital views and social media reach to 28mn and 58mn respectively. We are also expanding our original digital content offerings to capture the Malay digital community. Our digital-first content IPs, The House and 3 Gadis Manis registered 23mn and 4.5mn views respectively on Astro Gempak, Malaysia’s top Malay entertainment portal.
Our diverse content offering also drove our share of TV viewership to 76%, with viewers tuning in close to four hours daily. With our increasing reach on TV, Radio and digital, we saw TV Adex and Radex shares increased to 39% and 76% respectively.
In line with its aspiration to become a key content player in ASEAN, Astro is significantly increasing its annual content spend in signature vernacular and ASEAN IPs to be more relevant to a regional audience, thus providing greater monetisation opportunity. The Company is collaborating with like-minded best-in-class partners in Indonesia, Thailand and the Philippines, across the value chain from production, talent management, curation; to marketing, distribution and merchandising.
In April 2017, Astro entered into a strategic partnership with Turner Asia Pacific to co-develop and own verticals in Asian content for global distribution of quality Asian content. This new venture will also enable Astro to participate in the revenue distribution generated from Warner TV in the region.
This month, Astro signed a MOU with Kumpulan Media Karangkraf to pursue co-creation of a comprehensive line up of content IPs across Malay and Islamic verticals from theatrical, to TV, to digital and commerce as well as to create Nusantara IPs that can travel not only in Malaysia but regionally on Tribe, Boo and Warner TV platforms. Ownership of these IPs allows Astro to maximise monetisation potential from licensing, Adex, subscriptions and commerce, while at the same time anchor a long-term sustainable role for itself in the media value chain.
Digital Start-ups Gaining Scale Regionally
Tribe, a regional online video streaming service has expanded to Singapore via Singtel’s Cast platform and is now in three countries including Indonesia and the Philippines. Tribe now has a user base of 1.3mn who are watching an average of 125 minutes per week.
eGG Network has expanded its distribution to six countries with three new partnerships in its first year; in Singapore with Singtel, in the Philippines with Globe’s BEAM TV and in Indonesia with Orange TV and Genflix, and have plans to enter more new markets this year.
Astro’s ecommerce business, Go Shop has served a total of 1.04mn customers in Malaysia and Singapore. In Q1FY18, Go Shop sold 350k products and generated revenue of RM62mn.
Accelerating Our Digital Transformation
Rohana continued, “We are on track to digitalise 75% of our end to end processes and infrastructure, as well as nurture a culture of innovation to enable cost optimisation, operational efficiencies, higher competitive edge and faster speed to market. As part of our digital transformation journey, we embedded Artificial Intelligence (AI) and machine learning into our next generation omni-channel customer engagement platform to enable seamless and holistic customer care across all relevant communication channels. Similar technology is also powering personalised content and product recommendation on Astro Go, NJOI Now, Go Shop and astro.com.my.
We are currently operating in a very challenging environment. Our revenues in Q1FY18 were moderated y-o-y due to lower licensing income as our B2B sports channel sub-licensing has ended; in addition to lower subscription and home shopping revenue. Astro’s total Adex fell 5% y-o-y; this was against the backdrop of a broader market decline of 10%. The decline in revenue has been partially mitigated by higher contribution from NJOI with more activation of prepaid vouchers compared to the previous quarter.
Going forward, we expect revenue growth in the immediate term to be underpinned by home shopping, Adex, production revenues and NJOI, whereas subscription revenue is expected to be flat. We will continue to invest for future revenue growth by embracing three key imperatives under our digital transformation programme namely; digitalising our dominant legacy businesses, scaling our digital start-ups and deepening our strength in verticals and building a robust innovation pipeline.
We are making good progress to grow the depth and breadth of our customer engagement as reflected in our operational results. We will adopt a multi-prong approach to further grow our individual reach with mobile-first propositions such as Astro GO, Tribe and NJOI Now, offering the best-in-class experience across all screens, building and deepening our content verticals via our regional partnerships and scale up to reach an ASEAN audience.
We will also proactively manage new business realities to be a deserving market leader, underpinning growth with our premium and freemium propositions. We will maintain cost discipline and remain committed to deliver growth and deliver consistent shareholder returns. For instance, we are able to lower our customer unit costs for acquisition, cost to serve and content cost, as well as prudently mitigate foreign exchange volatility.
In summary, we are aggressively reconfiguring our entire business to serve consumers whose lifestyle choices are increasingly digital, mobile and personalised. The end state of our digital and business transformation programme is to see a mobile-first, analytics driven and customer-focused Astro delivering industry-leading innovations, achieving optimal monetisation model for our content verticals and start-ups, and thus lowering our cost to serve, gaining regional scale to drive efficiency and to address an ASEAN audience, and thus anchoring a solid platform for sustainable growth and to continue to position Astro as a stock that delivers positive total shareholder return.”