Astro shareholders should accept offer

Astro is going private:

IT has finally happened. Astro All Asia Networks will be taken private, putting to rest rumours that have been been brewing over the last two years, with continuous denials from company officials. Not surprisingly, it has happened at a time least expected.

In a style similar to the RM16bil privatisation of Maxis Communications Bhd in 2007, Ananda Krishnan is taking his pay-TV company private at a price of RM4.30 per share, equivalent to a RM8.5bil deal.

The reason? The same as when he took Maxis private; going private would provide a more conducive shareholding and operating structure given the company’s future high capital expenditure (capex).

Astro’s estimated capital requirement is between RM3bil and RM3.5bil. Half of that will be for the domestic market, while the other half is for its overseas markets in the Middle East, Australia and North Africa.

The article came out a few days ago, but is significant for shareholders. Unfortunately, the shareholders will be bought out, many at a significant cut to the highs. The good thing is, they should take it, if Astro wants to lever up its balance sheet for future expansions into risky markets, then it's all good.

At this time when TM is coming into the market and offering HD quality TV to homes everywhere, (Word is they are coming out with 40 channels in the official trials) Astro wants to use its cash flow here to expand in services elsewhere. Ok! If they want it that way!

Shareholders should be glad Ananda is willing to buyout the Astro shares at a fair price. It's not horrible, but not great either. Perhaps Astro should be listed as a growth company instead of a dividend paying one. They might not get a huge IPO following, but at least there will not be any conflict with future shareholders who will know what they are getting.

Zeti hints at higher interest rates, why this is significant

From the Business Times:

Bank Negara Malaysia said it may increase interest rates further to avert asset bubbles and discourage risky investments by people seeking better returns, even as inflation will likely remain "modest" this year.

"We will review the conditions at our next monetary policy meeting and work toward further normalising if necessary," governor Tan Sri Dr Zeti Akhtar Aziz said in a March 12 Bloomberg Television interview in Kuala Lumpur. "Inflation will continue to be modest and therefore it would not prompt us towards tightening, but that does not preclude that we will continue to normalise interest rates."

"Certainly the first half of the year, all the signs are pointing to stronger growth" as domestic demand and investment recover, she said.

Inflation of about 2 per cent would be considered "modest", Zeti said. Malaysia's consumer prices rose for a second month in January, climbing 1.3 per cent from a year earlier from an average 0.6 per cent in 2009.

Should price gains accelerate further to 3 per cent, for example, "we would begin looking at what are the sources of inflation because if it was demand-induced then" the central bank would look at "tightening" monetary policy, Zeti said.

Zeti refrained from raising interest rates in 2008 when consumer prices rose as much as 8.5 per cent in July and August amid soaring oil and commodity prices, saying inflation wasn't driven by higher demand and would ease as global growth slowed.

Malaysia's policy makers aren't "inflation targeters", she said last week.

While the rise in interest rates is not insanely surprising, given many other countries are currently tightening, the tone used in explaining the rationale of the interest rate moves point towards moving in a different direction that other central bank uber money printers.

For one, the bank has openly stated that it is not an inflation target-er, and is willing to repay back the savers who have been sitting patiently financing the Malaysian economy through this difficult time. This is excellent. This is a central bank that is willing to break from the crowd and not just follow inflation and economic data like a mindless lemming.

They are willing to raise interest rates and acknowledge savers which is fantastic given the ridiculous amount of money printing by everyone out there. Countries that have raised interest rates are doing so because of what inflation data tells them, following in the footsteps of the US; not because they want to compensate savers. While interest rate increases do give investors confidence, the knock on these central banks is that they will just as likely reverse actions if the data tells them to. Rarely is data ever stable especially given the current volatile economic conditions, so what currency investors crave is foresight on what a bank will do. Foresight that the bank will act accordingly to data is about as stable as an earthquake.

In a world where every central bank is hell bent tunneling in on economic growth, the Malaysian Central bank has taken a refreshing change in tone. This currency is going up, and the economy should be decent. If you want to break from the pack, Malaysia central bank is a prime example. Nothing says confidence like a country that is willing to acknowledge it will do something different from the money printing crowd and defend the savers and spending power of its currency, even if the economic recovery isn't as strong.

The Edge Malaysia v. Business Times v. Star Newspaper

Frequently, I quote various publications for content fodder.

I use the Business Times for the majority of the posts v. The Edge Malaysia and The Star for good reason. The Business Times, in my opinion is the easiest to read Malaysian business publication. The Star news paper is next, but it gives you the runabout when going to the business section while the Edge has content but personally i don't think much of the way they present their information.

For instance, in the Business Times, I click on "Today's newspaper"and BOOM, I get the latest stories and yet do not get bogged down with too much content like the Edge. It's easy to scan their site. I feel their articles are generally more relevant and of greater substance than the Edge Malaysia site which just spits out article after article in the politics and business section. The headlines are not informative and sound quite useless.

The Star Newspaper, to be fair isn't a business publication, as they cater to many audiences. The business site is just an extension of the main newspaper. I would rate theirs better than the Edge Malaysia and not as good as the Business Times.

On the other hand, the papers of the Edge financial Daily and the Edge is quite good. Unfortunately the website leaves much to be desired.

Thoughts on high speed train travel, skybus might expand to Bandar Utama

The Business Times posted an interesting article on the skybus service possibly expanding its services to Bandar Utama and Sunway.

"We have ferried more than 4.5 million passengers since LCCT was opened on March 23 2006," he said.

After one-and-a half years of service, SkyBus - which is one of two LCCT bus service providers operating from KL Sentral - was appointed as budget airline AirAsia Bhd's official bus.

The tie-up has enabled AirAsia passengers to enjoy an online bus fare of RM6.50 for one-way trip, instead of the normal RM9 one-way ticket.

SkyBus is now looking at carrying passengers from Bandar Utama to LCCT.

Chris said the service will start in the second quarter this year.

He said the company has also received invitation letters from the management of Sunway Pyramid and Genting Theme Park as well as other bus terminals to transport budget airlines passenger from their terminals.

Currently, SkyBus controls 20 per cent of traffic to LCCT. With more routes being opened in Klang Valley, its market share its expected to increase.

I've taken the economical route of going to kl sentral, sitting on the bus to the LCCT, and taking one of Air Asia's cheap flights to Penang.

Basically it costs me RM9.00 for the bus, RM15 for the taxi, and some 60 bucks for the flight. So this comes out to about RM85 for the entire trip. Not only do we have to consider the financial impact, but the opportunity cost in time taken. We're talking about 3.5 hours for a trip to Penang which normally takes about 4 hours to drive, not a great bargain there. (1 hour bus ride, 30 min taxi ride, 1 hour flight wait, 1 hour travel time)

High speed trains have a couple of interesting advantages that I only realized because of how ridiculous the costs I paid to get to the the airport in terms of time and money spent.

First and foremost, the high speed trains will most likely stop right in the middle of the city, at KL Sentral, so the only extra cost paid for is the taxi ride to the station. The bus trip is cut out, saving some one hour of time. You get to the train station 30 min before, one hour later you are in Penang or Singapore. (20 min taxi ride, 30 min wait for train, 1 hour travel = 2 hours of time spent)

In Singpore the train would arrive at a more convenient location so you would save on time spent traveling from the Singapore airport to your place of abode. Taxi costs in Penang are also outrageous, so you would save on costs there as well.

High speed trains have their demand for places with a 1-2 hour flight time. A 3.5 hour ordeal to fly to Singapore or Penang is quite ridiculous given that it equates to roughly half a working day. On the other hand, 2 hour travel time for train is much more tolerable. People commute 1 hour to work anyways, what is an extra hour?