According to Maybank Investment Bank (IB) Research, the regulator is in talks with ISPs to deny Internet access to Android TV boxes - a move that will ultimately benefit players such as Astro Malaysia Holdings Bhd.
KUALA LUMPUR: Astro Malaysia Holdings Bhd
's core earnings of RM184mil, which rose 6% year-on-year in 1QFY20 came within expectations, said Alliance DBS research.
In a note, the research house said the earnings met 28% and 30% of its and consensus estimates.
It maintained its buy call and target price of RM2 on the satellite TV broadcaster.
"Astro is still seeing a challenging year ahead amid structural changes in the global content and media industry, as well as the present threat of content piracy.
"Apart from its revenue-diversification efforts into advertising, e-commerce, content production, and possibly broadband, the company is also undertaking several cost-optimisation initiatives to help sustain its earnings," it said.
For 1QFY20, Astro's sales fell 9.8% q-o-q due to lower TV subscription revenue, seasonality in adex and slower merchandise sales at Go Shop.
However, core earnings rose 16% q-o-q to RM184mil due to the reduction in staff and content costs.
Alliance DBS notes that Astro's TV customer base was relatively stagnant at 5.7 million subscribers in the quarter.
"Given the decline in TV subscription revenue, this implies Astro Pay-TV saw some degree of churn (we estimate 140-150k subs), which was offset by subscriber gains at Njoi, its free satellite TV service," it said.
Average revenue per user improved to RM100.4 versus RM99.6 a year earlier.
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