PETALING JAYA: Astro Malaysia Holdings Bhd is finally getting into the fibre game to safeguard its turf as it exploits new grounds.
This is a move that the country’s leading integrated consumer media entertainment group should have taken some years ago, according to industry experts.
Its entry will heighten the competition in the fight of fibre users as fibre becomes important with the increasing demand for Internet access.
While its satellite services have great capabilities, Astro could hardly compete with the speed and quality which fibre optic offers, they opined.
Astro’s move could also potentially help the country bridge the connectivity gap in the most remote areas, while its satellite services could be deployed for Internet access.
In the case of Telekom Malaysia Bhd’s (TM) tie-up with Astro, it will enable the group to maximise the otherwise wasted network capacity, which could lead to higher wholesale revenues.
“Riding on TM’s network infrastructure is a shrewd move. Rather than doing it alone, this approach allows Astro to minimise the capital expenditure for its broadband gambit,’’ said CGS-CIMB Research in its latest report.
Astro’s move could also potentially help the country bridge the connectivity gap in the most remote areas, while its satellite services could be deployed for Internet access.
It said this was a natural evolutionary step for pay-TV players to transform into Internet service providers (ISP), similar to the move by Britain’s Sky UK Ltd in 2013 when video consumption is becoming more prevalent on the over-the-top (OTT) medium.
“The broadband market is also a rather greenfield territory for Astro, while its satellite business is facing a decline,’’ CGS-CIMB Research pointed out.
Recently, Astro and TM entered into a collaboration which allows the former becoming an Internet service provider (ISP).
This will allow Astro with access to TM’s full suite of infrastructure and connectivity solutions, comprising a whole range of wholesale services including high-speed broadband, bandwidth, backhaul and internet access.
For several decades, Astro has been offering pay-TV services using satellite technologies. It also earlier relied on its sister company, Maxis Bhd to offer its pay-TV and broadband bundled services. However, these are set to change.
CGS-CIMB Research noted that “there is a difference between being an ISP and a re-seller of another ISP’s broadband services.
“Astro has the ability to dictate its pricing and marketing strategies.”
Meanwhile, AmInvestment Research is mildly positive on the latest development.
It believed that the emergence of a formidable fibre broadband competitor with Astro’s dominant TV household penetration rate of 73% could potentially dampened TM’s Unifi’s growth momentum.
“In our view, the new arrangement with TM offers Astro the opportunity to launch its own fibre broadband service competitively against both Unifi and Maxis’ home fibre,’’ said the research house.
As an ISP, the fight is not just between TM which offers fixed broadband services via Unifi and Astro, but also to all other ISPs.
“Some price competition can be expected and it will affect fixed broadband incumbents such as TIME Dotcom Bhd and Maxis Bhd,” according to UOB Kay Hian Research.
It said that the effect would also be felt by other players such Celcom Axiata Bhd, Digi.com Bhd and Tenaga Nasional Bhd’s subsidiary, Allo, which recently entered into the fibre market.
However, the tie-up arrangement will benefit consumers as there will be a new player offering both fast connections and entertainment bundles.
An industry expert said: “To complete its offering, Astro should ride on Maxis’ mobile network for the wireless connection.
“This could turn it into a formidable player in a 5G environment that offers all in one –entertainment, wireless and fast fixed broadband access,.”
CGS-CIMB Research said Astro could bundle its broadband service with its prepaid satellite TV service NJOI, which made up more than half of its 5.7 million customer base as of end-July 2021.
It added that Astro could also play the pricing game to entice its pay-TV subscribers to jump ship from other competing ISPs.
Hong Leong Investment Bank Research said the tie-up would allow Astro to enhance its customer experience as bundling will lead to more attractive value propositions including convenience (payment under one bill), eliminating rain feed issues from satellite, viewing on-demand content on TV as well as cost-savings versus subscribing to TV and broadband services separately.