Global Mediacom ($BMTR): Public Expose Takeaways
Global Mediacom ($BMTR) recently hosted a public expose at its Jakarta headquarter, led by Director David Audy and CFO Oerianto Guyandi. BMTR is the holding company of $MNCN (c.59% stake) and $MSKY (c.88% stake), with other new media businesses including MNC Playmedia (100% stake). We have a REDUCE rating on BMTR at a IDR550 TP (8% downside potential); preferring MNCN within the MNC Media group and SCMA within the Indonesia media sector. Below are the key takeaways.
MNCN: 7-10% revenue growth for 2017E, MNC Pictures IPO in 2017
Mgmt remains bullish on the outlook for FTA TV, with MNCN continuing to be the dominant market leader with 44.4% prime time market share as per 11M16 (up from 35.1% in 11M15). Mgmt expects the industry to grow between 5-10% in 2017, with MNCN’s top line to grow between 7-10%. Capex for 2017 should be notably lower at around USD25m (maintenance), down from USD50m in 2016E, and USD100m in 2015, post the peak capex cycle as construction of the new studio buildings has been completed. This will translate to significantly higher FCF, which could be used to partially pay off its existing USD250m debt and boost dividend. Mgmt is also confident of a smooth refinancing of a USD250m loan which will be due in Sep 2017. Meanwhile, it targets a MNC Pictures (content arm) IPO by the end of 2017, potentially merging Star Media Nusantara (Talent Agency) into MNC Pictures to enlarge the company size before offering 20-30% to the public.
MSKY: Succesful debt refinancing in November 2016
Mgmt refinanced MSKY’s USD250m debt in Nov 2016 with a new USD190m loan, while paying off USD61m from the proceeds of MSKY’s 10% right issue. Mgmt said that MSKY currently has 2.5m PayTV subscribers with around a 65-70% market share, via 3 brands: Indovision, OkeVision, and TopTV. We have a cautious view on the Satellite PayTV industry amid intense competition and the absence of broadband bundling vs. the cable players.
MNC Playmedia: Hits 1m home-passed milestone
Mgmt said that Playmedia (Cable FTTH Broadband) has hit the 1m home-passed rollout in Dec 2016 with around 10% penetration (100,000 subscribers). It is aiming for a 2m home-passed rollout by the end of 2018E with penetration ranging from 10-20% (200k-400k subscribers). The current ARPU is around USD23-35/mth, with >50% of subscribers based in Jakarta.
Sky Vision Network (SVN): Looking to sell 10-30%
SVN will be the new holding company for MSKY and Playmedia, aiming to be Indonesia’s leading player for both Satellite PayTV and Cable Broadband+Pay TV. Mgmt is currently in talks with 2 global investors for SVN, planning to raise up to USD300m by offering a 10-30% stake via a strategic partnership or IPO. Successful monetisation of SVN will be a key catalyst for BMTR, in our view, to fund its future expansion as well as de-leverage the balance sheet.