“Asian Pay Television Trust: Strong Broadband Growth Amid Weaker NT$, Strategic Debt Management, and Stable Distribution Outlook”
Asian Pay Television Trust (APTT) recently released its financial results for the third quarter ending September 30, 2024, showcasing several key highlights that could potentially impact shareholder value and influence share price.
Broadband Subscriber Growth and Revenue Improvement APTT has successfully executed its broadband growth strategy, resulting in the acquisition of approximately 8,000 new broadband subscribers during the quarter. This growth has pushed the broadband subscriber base to represent 58% of the basic cable TV subscriber base, an increase from 51% in Q3 2023. Broadband revenue in New Taiwan Dollars (NT$) improved by 7.9% for the quarter and 8.7% for the nine months compared to the previous corresponding period (pcp). Broadband revenue now constitutes approximately 28% of APTT’s total revenue, up from 25% in the same period last year.
Revenue and EBITDA Affected by Weaker NT$ Despite the positive momentum in broadband growth, APTT’s revenue and EBITDA were negatively impacted by a weaker NT$. For the quarter, revenue stood at S$63.7 million, with an EBITDA of S$37.4 million. The EBITDA margin was 58.8%, bringing the nine-month figures to S$189.5 million in revenue, S$111.6 million in EBITDA, and an EBITDA margin of 58.9%. In NT$, revenue and EBITDA improved by 1.0% and 2.6% for the quarter, supported by one-off channel leasing revenue, but decreased by 2.1% and 0.2% for the nine months compared to the pcp.
Total Subscriber Base Growth APTT’s total subscriber base grew by approximately 7,000 net subscribers in Q3 2024, reaching around 1,339,000. This growth was driven by aggressive marketing efforts and attractively priced bundled promotions, particularly targeting broadband and premium digital TV subscribers.
Disciplined Debt Repayment and Interest Rate Management APTT demonstrated disciplined debt management by repaying S$39 million in net debt during the nine months, with an additional S$20 million expected to be repaid in the next six months. The trust entered into new interest rate swaps to hedge 100% of outstanding offshore debt until June 30, 2025. Approximately 90% of total outstanding debt is protected against rising interest rates, limiting interest rate exposure to just 10% of total debt. Discussions with lenders to refinance both onshore and offshore facilities are progressing well, with the aim to complete refinancing by mid-2025 and bring a sizeable portion of the more expensive offshore debt back onshore to reduce interest costs.
Stable Distribution Guidance APTT has re-affirmed its distribution guidance of 0.525 cents per unit for H2 2024, maintaining the full-year 2025 distribution guidance at 1.05 cents per unit. This guidance takes into account elevated interest rates, a weaker NT$, ARPU pressure, and the declining basic cable TV business. Depending on the refinancing outcome and hedging program beyond June 2025, the distribution could be adjusted in 2026.
Capital Expenditure and Cash Flow Management For the nine months, capital expenditure increased by 20.9%, primarily due to the purchase of vehicles to replace leased ones, aimed at overall cost savings. As a percentage of revenue, capital expenditure was within industry norms at 13.4% for the quarter and 14.4% for the nine months. EBITDA less capex, representing net cash flows used to fund distributions and debt servicing, was approximately S$84 million for the nine months, indicating healthy net cash flows despite lower revenue.
Net Profit and Foreign Exchange Impact APTT’s net profit for the quarter was S$6.5 million, down 36.4% from the previous year. For the nine months, net profit stood at S$33.2 million, an 11.2% increase from the prior year. The reduction in net profit for the quarter was influenced by non-cash items such as foreign exchange losses and mark-to-market movements.
Future Outlook APTT’s strategic initiatives include expanding FTTH service area coverage, increasing network capacity, and driving higher-speed plans to capitalize on data backhaul opportunities. The trust aims to continue using excess cash generated from operations to accelerate debt repayments and focus capital expenditure on areas that can generate broadband growth and sustainability for the long term. Discussions for refinancing both onshore and offshore facilities are underway, with a target completion by mid-2025.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research or consult a financial advisor before making investment decisions. The information presented is based on publicly available data and is subject to change. The author does not hold any positions in the mentioned securities at the time of publication.
View their Historical chart here
