Nasdaq listing for Astro predicted

Satellite television network Astro is said to still be hoping to become the first Malaysian company to list in the US, with plans for a Nasdaq IPO.

The company, controlled by local tycoon and Mahathir associate T. Ananda Krishnan, is believed to be reviving flotation plans, which will either see it listed at the close of the fourth quarter, or early next year.

Goldman Sachs and Morgan Stanley Dean Witter hold the mandate to raise roughly $300 million for the company, which wants to complete a simultaneous listing on Mesdaq, Malaysia's technology exchange. Earlier this year, state news agency Bernama reported that the Securities Commission was reviewing a dual listing proposal for 10% of the company's equity.

The plan soon fell by the wayside, however, following the Nasdaq's sharp drop-off and is being reviewed now in the face of volatile equity markets, largely because the company needs to raise new equity to finance its capital expenditure plans. Astro is the brand name of Measat Broadcast Network Systems Sdn (MBNS), whose two major shareholders comprise the government's investment arm Khazanah Holdings, which holds a 17% stake and Usaha Tegas Entertainment Systems, Ananda's private investment arm, which has a 69% stake. The family-owned company also controls: Maxis Communications, Malaysia's second largest cellular company; Binariang, the country's first commercial satellite operator; publicly-listed gaming operator Tanjong plc and; independent power producer Powertek.

Just prior to the financial crisis, the group had hoped to raise about M$1.5 billion ($394 million) through the flotation of Binariang (the ultimate parent of Maxis and MBNS), but was forced to delay the offering and then scale down its plans. As one local banker explains, "It realised that the issuance vehicle was just too cumbersome. Initially, it spun out Maxis by selling a 33% stake to British Telecom for M$1.8 billion and then earlier this year, decided it wouldn't include Binariang's satellites as well."

Local observers also report that Astro has been registering strong growth, although so far has made little headway with its much-vaunted plans for satellite-delivered broadband multimedia and interactive services. "The satellite TV system has been very popular in Malaysia with subscribers growing by about 20% a quarter," says one Kuala-Lumpur based banker. "In the early days, it failed to catch on because it had been launched right in the middle of the financial crisis, but now subscribers are up to about half a million."

The company operates a total of 24 television and eight radio stations at a cost of M$799 per set-top box and M$80 per month in subscription fees. In March, MBNS unveiled a strategic equity investment from Microsoft that was intended to help develop broadband services. Over the short-term, these were to include on-line stock market information, share trading and home banking, with email services to be introduced at a slightly later date.

Yet as one observer reflects, "The company has the internet capabilities, but unfortunately not the content. There have been delays getting the necessary regulations in place to allow on-line share trading and the broking community has been slow getting its act together."

Backed by its two satellites, MBNS has a C-band footprint which covers a large swathe of Asia from coastal China to Indonesia and from Myanmar to the Philippines. Its ultimate ambition is to expand across the whole of the region, in the process forming joint-venture partnerships with local operators. In Hong Kong, for example, it has a joint venture with Television Broadcasts Ltd (TVB) for the development of a Chinese-language web portal and digital satellite pay-TV service Galaxy.

So far this year, the company has mainly financed itself in the domestic debt markets. A $280 million loan arranged by Citibank was obtained in June, while a M$715 million Private Debt Securities Issuance Facility (PDS) and M$731 million syndicated bank guarantee facility were put together in March.

The financing package, arranged by AseamBankers Malaysia Berhad, comprised a M$365 million guaranteed commercial paper and medium term note programme and M$350 million in guaranteed serial fixed rate bonds. Series 1 comprised M$175 million 2005 bonds with a semi-annual coupon of 7.75% and Series 2, M$175 million 2006 bonds with a semi-annual coupon of 7.85%.