Asian Pay Television Trust (APTT)
APTT is the first listed business trust in Asia focused on pay-TV businesses. APTT has an investment mandate to acquire controlling interests in and to own, operate and maintain mature, cash generative pay-TV and broadband businesses in Taiwan, Hong Kong, Japan and Singapore.
FY 2018 Financial Highlights:
Source: APTT FY 2018 Presentation Slides
- APTT’s FY 2018 total revenue declined by 6.3% year-on-year to SGD 313.9 million.
- EBITDA dropped by 8.4% to SGD 184.6 million for the year ended 31 December 2018, while EBITDA margin was 58.8% in FY 2018, down from the 60.2% in FY 2017.
- Meanwhile, APTT’s total operating expenses for FY 2018 decreased by 3.1% year-on-year to SGD 129.3 million.
Source: APTT FY 2018 Presentation Slides
APTT holds only one investment: Taiwan Broadband Communications Group (TBC), a cable operator in Taiwan. TBC has been owned and managed by APTT since 2013. Revenue generated can be attributed to three business segments: Basic cable TV, Premium digital cable TV and Broadband.
Performance Drivers (Positive Factors)
- RGUs for Premium Digital Cable TV and Broadband
Although all three segments experienced a year-on-year decline in FY 2018 revenues, the RGUS (Revenue Generating Units) for Premium digital cable TV and Broadband both improved for the year ended 31 December 2018. Premium digital cable TV RGUs rose by about 2,000 to reach approximately 196,000 in FY 2018, while Broadband RGUs went up by around 6,000 to circa 216,000. The improvement by Broadband RGUs was especially noteworthy as this segment continued to experience intense competition from the top mobile operators, who have been flooding the market with low-cost unlimited data offerings.
- Successful Refinancing
As part of its debt management programme, APTT successfully refinanced its existing borrowing facilities at lower interest margin and arrangement fees, as well as extended its interest rate swaps. This will lower APTT’s borrowing costs by approximately SGD 9 million per year, and also provide funding certainty for the next three years.
Performance Drivers (Negative Factors)
- Basic Cable TV
FY 2018 revenue for Basic cable TV decreased by 6.8% year-on-year to SGD 250.0 million. This decrease was contributed by a decline in both subscription revenue (FY 2018: SGD 203.3 million; FY 2017: SGD 215.5 million) and non-subscription revenue (FY 2018: SGD 46.7 million; FY 2017: SGD 52.8 million).
Subscription revenue accounted for 81.3% of Basic cable TV revenue for FY 2018. This revenue was generated from TBC’s Basic cable TV RGUs, which dropped in 2018 for the first time in TBC’s history. The drop was primarily a result of the saturated cable TV market in Taiwan, the cessation of analogue TV broadcasting, video piracy issues and aggressively-priced IPTV (Internet Protocol Television).
Non-subscription revenue accounted for 18.7% of Basic cable TV revenue for FY 2018. This revenue was generated from the leasing of television channels to third parties, the sale of airtime advertising and fees for the installation of set-top boxes. Non-subscription revenue for the year declined year-on-year mainly due to lower revenue generated from channel leasing, which continued to be affected by the decrease in demand for home shopping and heightened competition from internet retailing. Both trends have negatively impacted the channel leasing revenue not just for TBC, but for the entire cable industry in Taiwan. Meanwhile, the decline was partially offset by higher airtime advertising sales.
- Premium Digital Cable TV
Premium digital cable TV revenue decreased by 11.5% to SGD 13.8 million for the year ended 31 December 2018. This decrease came on the back of a decline in both subscription revenue (FY 2018: SGD 13.2 million; FY 2017: SGD 14.9 million) and non-subscription revenue (FY 2018: SGD 0.6 million; FY 2017: SGD 0.7 million).
Subscription revenue was generated from TBC’s Premium digital cable TV RGUs, which increased in 2018. However, ARPU (Average Revenue Per User) dropped year-on-year due to promotions and discounted bundled packages that were offered to generate new RGUs and to retain existing RGUs. Video piracy issues and aggressively-priced IPTV have also impacted the ability to attract new RGUs and strengthen ARPU.
Meanwhile, non-subscription revenue was primarily generated from the sale of electronic programme guide data to other system operators.
FY 2018 Broadband revenue fell by 1.9% year-on-year to SGD 50.0 million. Broadband revenue was mainly accounted by TBC’s Broadband RGUs, which rose in 2018. Nevertheless, ARPU was lower compared to the previous year. This was because TBC had to offer higher speeds at competitive prices to acquire new RGUs and re-contract existing RGUs – as mobile operators continued to offer unlimited wireless data.
Source: APTT Annual Report FY 2018