AMedia

In Oct 2012 it announced a proposed bonus issue of 250.80 million new shares on a one-for-one basis and also a proposed issue of 250.80 million free warrants on the basis of one warrant for every share held.

 

The steep fall in its share price (08 - 09 Oct 2012) could raise concerns about the exercising of the warrants. According to the Oct 5 2012 announcement, the indicative exercise price of the warrants was assumed at 51.1 sen per warrant, which was the theoretical ex-bonus price, calculated based on the five-day volume weighted average market price of the shares up to and including Oct 4 2012 of RM1.021.

 

In June 2012 Asia Media Group Bhd had fixed the issue price for the final tranche of the private placement shares at 38.5 sen each for the tranche allocation of 11.4 million shares.

 

In 2011 it had placed out 35% of the paid-up in 2011. The private placements entail the issuance of up to 79.80 million new shares to identified Bumiputera investors. The funds from which will also be directed towards building DTDB infra. Along with the CASP-I license, AMedia was also awarded network service provider and network facilities provider licenses.

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Asia Media Group Bhd, the country's largest transit-television network operator, plans to launch a terrestrial digital TV station by as early as the first quarter of 2012.

 

It has allocated as much as RM50 million in capital expenditure in 2013 to help it with the launch in the Klang Valley .

Its first step in the plan to launch the terrestrial digital TV station is to launch the "out-of-home service". Out-of-home service means that people who use public transport such as the Rapid buses and the city's rail service will be able to watch live TV.

Currently (Aug 2012), Asia Media operates transit TV services for the city buses, but most of the feed are pre-recorded, with the content coming from third parties.

Asia Media is expecting to bring in as much as RM50 million in 2012 from advertisements alone.

Most of the shows will be in English and Bahasa Malaysia , with content coming directly from Asia Media.

 

The company also has a licence to operate a radio network. The radio network will focus mainly on the Chinese market.

Apart from the cost, finding the right content is the major drawback, pulling the company away from this path.

For the nine months ended August 30 2011, the firm's pre-tax profit stood at RM11.74 million versus RM8.13 million in the same period a year ago.

 

It plans to expand its reach onto trains and taxis once it fully rolls out its DTTB system

by end of 2012.

 

It controls 73% of the market in its business segment with its major clients being Syariakt Prasarana Negara Bhd, which operates RapidKL and Rapid Penang busess and trains and Konsortium Transnasional Bhd which runs the interstate bus routes.

 

It is optimistic about renewing its tie up with Prasarana when its contract with the latter expires at end of 2013. It holds a license as content application service provider.

 

A potential new revenue stream being considered by AMedia is the leasing of its excess capacity to other players or those who serve the hotel segment.

 

Its Strength …

 

It belongs to a small group of companies that own free to air (FTA) broadcasting licenses and is essentially able to provide services similar to those offered by RTM and Media Prima.

 

Certainly, this license has enhanced the company’s appeal for it has attracted other players in the media space. Rumors had it in June 2011 that the company was in talks with Star on a possible takeover but its CEO denied.

 

AMedia has not have any discussions with Star but they do want to explore all the opportunities it has. A few entities, local and international, have shown interest in taking up a stake in AMedia in July 2011 but things are at a preliminary stage.

 

Talks were also ongoing with a number of investors, including local media groups, on the purchase of a 10% stake in the company in July 2011.

 

So why would local media company want a stake in Amedia.

 

Apart from its huge margins, the company’s license to provide FTA broadcasting services offers an avenue for bigger media players eyeing a piece of the electronic media market.

 

In 2010, the MCMC awarded AMedia a content application service provider (CASP-i) license, which enables it to enter the digital television, FTA television and radio broadcasting industry.

 

AMedia is one the few companies in Malaysia that are permitted to offer broadcasting services and facilities. A full CASP-I license allows the company to operate nationwide 24 hour non subscription broadcasting, subscription broadcasting and terrestrial radio broascasting services.

 

Currently (July 2011), only Media Prima and RTM hold FTA broadcasting licenses.

 

With CASP-I, AMedia has the right to provide broadcasting services within the frequency in Malaysia and to operate multiple TV, radio and data channels.

 

The company has its eye on digital terrestrial television broadcasting – a service to deliver real time as opposed to pre recorded, content on mobile screens.

 

However, to realize the full potential of services that the CASP-I license enables the company to offer, it needs substantial capex and foothold in the industry. Effectively, AMEdia has to compete with established players like Astro and Media Prima.

 

Its CEO said that it has no immediate plan to venture into digital television. Furthermore, expanding its DTDB segment would absorb most of its capex in the years ahead.

 

AMedia is part of the ETP, under which it plans to invest rm500 million over the next 10 years from 2011 to provide live broadcasting and grow its network of mobile broadcasting on public transport.

 

This will be part of its project to deploy digital broadcasting in stages. It first wants full coverage of the Klang Valley by the end of 2011.

 

Asia Media, Malaysia’a largest transit TV operator, offered a good growth story in a small but fast-growing media segment. Another key attraction is the group’s exposure to the public transportation upgrade in the Klang Valley which will allow it to expand its services to the LRT and MRT systems.

 

It could be catalysed by success in securing the licence to operate on the LRT. Asia Media provides investors with an alternative exposure to growing media segments other than FTA TV and newspaper.