Malaysia's Astro raises Sun Direct stake to 35%

The Kalanithi Maran-owned Kal Media Services will get a Rs 396-crore infusion from Astro All Asia Networks Plc (Astro), a Malaysia-based cross-media group. The investment by the Malaysian group will increase its shareholding in Sun Direct, the country’s second largest DTH operator, by another 15 per cent from the current 20 per cent.

Kal Media Services had applied for permission for Astro to pick up a 37.5 per cent stake in Kal Media Services. Kal Media Services was then meant to pick up a 40 per cent stake in Sun Direct, giving Astro an effective indirect stake of 15 per cent, taking Astro’s total effective holding in the DTH company to 35 per cent. Currently, Astro, via its subsidiary South Asia Entertainment Holdings, holds 20 per cent stake in Sun Direct.

The proposed investment got the Foreign Investment Promotion Board’s (FIPB’s) nod recently.

According to FIPB, “The proposal of Kal Media Services to induct foreign equity in an investment company to the tune of Rs 396 crore has been cleared.”

The proposed investment will be through Astro’s investment arm South Asia Entertainment Holdings Ltd (SAEHL), incorporated in Mauritius and a 100 per cent subsidiary of AOL, according to sources. Several phone calls and emails to Sun Direct officials and to Maran’s office remained unanswered.

Meanwhile, Haji Badri Haji Masri, chairman, Astro All Asia Networks Plc, told his company’s shareholders that “in India, our joint venture, Sun Direct TV, continues to perform to expectations as it leverages on the strong demand for digital pay-TV services and India’s favourable regulatory framework”.

The group’s annual report further added that Sun Direct activated around 1.6 million new subscribers in the financial year 2010, taking its customer base to 4.1 million in just over two years from the launch of its services.

As on January 31 this year, the group had invested RM490 million (around Rs 599 crore), in Sun Direct TV for a 20 per cent equity interest. During the year, the group accounted for RM81 million (around Rs 110.2 crore) for its share of the anticipated start-up losses arising in Sun Direct TV. It may be noted that on December 5, 2009, SAEHL subscribed for 6,283,775 additional new ordinary shares of Rs 10 each in Sun Direct at a total cash consideration of Rs 50 crore, representing a subscription price of Rs 79.57 per subscription share. Subsequent to the above subscription, the holding of SAEHL in Sun Direct stood at 20 per cent.

Astro is Malaysia’s leading cross-media group with a presence in DTH, TV services, commercial radio and TV programming. In FY2010, the group reported a 10 per cent increase in revenue, which stood at RM3.3 billion, while the group Ebitda rose 24 per cent to RM831 million, or a margin of 26 per cent.