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| Bringing Astro down! |
Astro was cooked almost to cinder in the afternoon session.
As for its fundamentals, they, however, remain intact.
After first falling 19 sen, it was chipped down ( more like chopped down) further by small
lots trading to end down a stupefying 32 sen at RM2.77.
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| Chopping down Astro to Size |
UOB Kay Hian Malaysia Research said there were several entry
barriers for competitors seeking to compete against Astro.
In its
report issued ahead of its IPO last Friday, the research house said Astro had
exclusive rights to broadcast via satellites (DTH) until 2017, which
essentially prohibited any competition from using the same technology to
broadcast TV programmes.
The
research house further pointed out Astro's large variety of exclusive popular
international content also prohibited competitors from broadcasting those
programmes in Malaysia.
"Its
68 Astro-created TV channels, with more than 40,000 hours of in-house produced
content for the local audience, makes it difficult for a newcomer to penetrate
the local content segment.
"The
heavy capex that is needed to build a broadcast network acts as a deterrent to
would-be competitors. This includes the need to set up terrestrial broadcasting
network, operating centre and satellite transponder space.
"A
long gestation period is needed to set up an entire broadcasting system before
commercialisation can even begin. This gives Astro a significant head-start
over any new entrant," said UOB Kay Hian Research.
However,
the research house said excessive bidding for exclusive content may result in
cost overrun. This includes bidding for the popular English/Barclay's Premier
League (EPL/BPL) as well as bidding for content that will boost its premium
position in the pay TV market.
Another
factor it said were competitive pressures. Already broadcasting variations of
what was available on Astro, Telekom Malaysia (TM) could be a force to be reckoned
with in the IPTV segment in the future.
Other
risks were that the younger generation was increasingly turning to the internet
for entertainment, such as YouTube, which could threaten Astro's viewership as
well as advertisement revenues.
Anyway, Astro is oversold and may need a traction price point
for a good rebound.
Will that happen tomorrow?
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