Tuesday, October 02, 2012

Astro- the case for strong growth looks dicey

There is an interesting article in Business Insider that dealt with the state of the internet. This article, presented by Henry Blodget, the CEO of Business Insider, talks about the state of & the impact of commercial internet. One of the slides shows the decline of pay TV subscription in the US. See Chart 1 below.

 Chart 1: US Pay TV Subscription (Source: Business Insider)

 On the other hand, over-the-top video (such as Netflix & Youtube) is on the rise. See Chart 2 below. The question to ask is whether the decline in Pay TV subscription was due the economic condition in the US or consumers' preference. If it is the latter, then we can expect the same phenomenon to happen in Malaysia.

This development could raise doubts about the assumption made by some research houses about the strong growth for Astro in order to justify the high PE multiple for its IPO. While Astro is venturing into IPTV (like Unifi), that business model is no different from its existing satellite TV. Over-the-top video works well with the new generation of smart TVs which enables consumers to access the internet for video directly.

Chart 2: Growth of Over-the-top video (Source: Business Insider)

1 comment:

Kong Hui CHONG said...

Feel good to read your valuable post.

People still rush into buying ASTRO for the brand name.

Good luck to their money...