MENU

What Kind Of Business Do You Get When You Add Singapore Press Holdings Limited With Starhub Ltd?

In Singapore’s business landscape, there is a clear distinction between telecommunications companies and media companies.

For instance, when it comes to telcos, we have companies such as Singapore Telecommunications Limited (SGX: Z74) and StarHub Ltd (SGX: CC3). Their business revolves around providing the infrastructure needed for our communication, media-viewing, and data-transfer needs.

As for media companies, there’s Singapore Press Holdings Limited (SGX: T39). Its job is to produce the news and television series consumers watch and bring them music via radio stations.

Given these, it may be easy to assume that telco and media companies are separate and that every country outside of Singapore would be similar. But, that would be faulty thinking.

In fact, there’s one company operating and listed in Malaysia that can be considered as a hybrid of both a telco (such as StarHub) and a media company (such as Singapore Press Holdings). The company is Astro Malaysia Holdings Bhd (KLSE:6399.KL).

Infrastructure and content provider

Astro Malaysia is the largest satellite TV provider in Malaysia, with a penetration rate of 63% amongst TV-households in the country. So, the company’s clearly a pay-TV provider, providing customers access to TV services in a similar manner to what StarHub and SingTel does.

Yet, Astro Malaysia is also a content provider. The company generates more than 10,000 hours of content a year and distributes them through print media, satellite TV, and the internet. For some context, Astro Malaysia’s radio channels reported a collective listernership base of 12.9 million for its fiscal year ended 31 January 2015 (FY2015), which is more than 10 times the listenership base of SPH’s radio shows. In these ways, Astro Malaysia can be seen as a close comparable to Singapore Press Holdings.

Business seems to going fine for Astro. In FY2010, the company generated revenue of RM2.97 billion – this has since grown by 76% to RM5.23 billion in FY2015. The bottom-line’s not as impressive, but there was still growth – over the same period, Astro Malaysia’s profit had climbed from RM501.5 million to RM519.4 million.

The future of Astro Malaysia

Given that some investors are worried about how services delivered via the internet might replace some of the traditional businesses of Singapore Press Holdings and StarHub, is Astro Malaysia also vulnerable?

If there is such a risk, Astro Malaysia has certainly not felt it yet. Beyond its aforementioned revenue growth, the company’s household penetration for satellite TV and radio listenership actually grew by 14% and 6%, respectively, in FY2015. Even more impressively, the company’s average revenue per user (ARPU) and radio advertising revenue have also been growing over the past 5 years. Does these mean that Astro Malaysia is immune to the potential risks posed by the internet? Only time will tell.

For more investing insights and important updates about the stock market, check out the Motley Fool's weekly investing newsletter Take Stock Singapore. This free newsletter can teach you how to grow your wealth in the years ahead, so do take a look here.

Also, like us on Facebook to follow our latest news and articles. The Motley Fool's purpose is to help the world invest, better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim does not own shares in any companies mentioned above.