According to MBSB Research via Berita Harian, Astro could potentially become a target for merger and acquisition (M&A) activity following a significant decline in its market value to around RM300 million, compared to around RM18 billion at its previous peak.
It’s been a rough few years for Astro
For your information, several factors are seen as potentially making Astro an M&A target. Apart from having a smaller market capitalisation, the company also has a portfolio of original content and intellectual property protected under the Copyright Act 1987. Astro also still recorded a profit of RM1.6 million for the first quarter of the 2027 financial year despite facing a challenging operating environment.
Currently, Astro continues to face various challenges in the modern streaming era due to the abundance of free content, in addition to the recent loss of the World Cup broadcasting rights. At the same time, the company continues to be burdened with high fixed costs, including those related to MEASAT's transponders and satellites.
Commenting on the potential merger, MBSB Research is of the view that Telekom Malaysia Bhd (TM) has the potential to gain greater value if it merges with Astro compared to the mobile network operator. According to the firm, TM's dominance in the residential fibre optic segment, as well as content offerings through Unifi TV, can be further strengthened with the inclusion of Astro content in the company's ecosystem.
However, the possibility of TM carrying out M&A activities at this time is still limited as the company is focusing on expanding its fibre optic network, developing 5G support infrastructure, and committing to paying dividends. It is also worth noting that this is merely an analyst's view and does not involve any official recommendations from any party, so, do take this news with a grain of salt.
Is it possible for Astro to turn it around?
Personally, we feel this could be a good move for Astro. After all, Telekom Malaysia is a steady partner that could help offset some of Astro’s losses. What are your thoughts on the news? Feel free to leave your comments below.
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