In Kuala Lumpur
Bookmark & Share
SHARES of Astro All Asia Networks plc fell 20 sen or 5.5 per cent to RM3.42 yesterday as investors sold into strength following weekend reports the company could be disposing of its loss-making international units.
The satellite television operator yesterday told the stock exchange that it had received 'certain proposals' which it was evaluating. 'The board wishes to inform that it is considering various options to restructure the company with a view to achieving a more efficient capital and corporate structure.'
Astro said yesterday two of its biggest shareholders would take over its overseas businesses, leaving it with the profitable local operations. Usaha Tegas - the privately held investment vehicle of Malaysian tycoon Ananda Krishnan - and state investment agency Khazanah Nasional would acquire Astro's international business for an undisclosed sum, media reports said.
Astro's main interest overseas is its one-fifth stake in India's Sun Direct TV, which local weekly The Edge Malaysia said would be bought by Usaha Tegas and Khazanah in preparation for a merger with Aircel Ltd, the Indian mobile telco unit of Maxis Communications.
Different press reports said shareholders could receive a cash payback as part of the restructuring, ranging from 80 sen to RM1 a share . Usaha Tegas owns slightly over 42 per cent of Astro and Khazanah about 21 per cent. Astro had asked for a trading suspension in the morning session and said it would make an announcement at the appropriate time when a firm proposal has been determined.
Analysts said the disposal, if true, would be short-term positive as Astro would not have to account for its share of Sun Direct TV's losses, estimated at RM80 million-RM100 million (S$32.5 million-S$40.6 million) a year. In the longer term, however, Astro could lose out on Sun Direct TV's potential, given it is viewed as India's fastest growing direct-to-home TV operator with an estimated 24 per cent market share.
Even so, a Sun Direct TV and Aircel merger would create synergies in terms of country concentration as the merged entity could offer bundled packages, said AmResearch analyst Izz Al-Din Maslan.
He said the disposal would avoid earnings leakages and put Astro back into a net cash position of RM200 million next year from a net debt of RM680 million. Astro is estimated to have invested RM454 million in Sun Direct TV, and the latter is only expected to become profitable in about four years.
'Astro's domestic operations are providing strong cash flow and by itself could be a good dividend play, but the restructuring is still uncertain,' Mr Izz Al-Din said, adding that at current prices the stock is a 'hold'.
The counter - weighed down previously by Astro's messy joint venture in Indonesia with the Lippo group - has been steadily climbing from about RM2.50 in April. Astro has since disentangled itself from the joint venture but was forced to write off over RM1 billion.
Search Property News
