Asian Pay Television Trust Reports Q1 2026 Financial Results: Broadband Growth and Disciplined Debt Management Drive Outlook
Key Highlights for Investors
- Revenue: S\$56.8 million for the quarter, a decrease of 4.2% year-on-year, primarily due to lower Basic Cable TV subscription and non-subscription revenues. However, this was cushioned by continued growth in the Broadband segment, which saw a revenue increase of 7.6% to S\$19.7 million.
- Subscribers: Total subscriber base grew to approximately 1,391,000, up by 7,000 or 0.5% from the previous period. Notably, broadband subscribers rose to 419,000, marking a 1.9% increase quarter-on-quarter, with broadband now representing 69% of the basic cable TV base. The overall subscriber base has grown over 15% since 2020, demonstrating the sustained demand for broadband services.
- EBITDA and Net Profit: EBITDA fell by 5.2% to S\$31.6 million, with margins at 55.5%. Despite lower operating profit, net profit increased 19.6% to S\$8.7 million, supported by lower operating expenses and positive foreign exchange movements.
- Disciplined Debt Management: Net debt was reduced by S\$12 million in the quarter (approx. 1.1% of total debt), with a continued focus on reducing more expensive offshore loans. The group’s net debt/EBITDA ratio remains elevated at 7.6 times, largely due to lower EBITDA, but active repayment plans for 2026-2027 (S\$43m to S\$63m) are in place.
- Distribution Guidance: APTT reaffirmed its 2026 distribution guidance at 0.80 Singapore cents per unit (cpu), to be paid in half-yearly instalments of 0.40 cpu. This reflects a reduction from the previous years’ DPU, underscoring a more conservative distribution policy amid ongoing capital and debt requirements.
- Capital Expenditure: Capex increased sharply to S\$8.9 million (15.7% of revenue), supporting broadband growth initiatives such as expanding FTTH coverage, supporting higher speed plans, and boosting capacity. Management reiterated that annual capex will remain within the 10%-15% range of revenue, in line with industry norms.
Broadband Growth Momentum
- Market Share Gains: Broadband subscriber growth has accelerated, with APTT’s TBC Group capturing 61% market share in its operating areas (up from 34% in 2020), while the primary competitor’s share declined from 61% to 34% over the same period. Bundled package offerings and aggressive marketing continue to drive uptake.
- Product Upsell Opportunity: 68% of broadband subscribers are still on lower speed plans (≤300Mbps), indicating significant room for ARPU uplift through up-selling higher-speed packages and bundled offers.
- Revenue Impact: Broadband revenue has consistently grown over the years, rising more than 7.6% year-on-year in Q1 2026, and over 5x more customers signed up for higher speed plans since 2020, reflecting strong demand for faster connectivity.
Debt Management and Financial Position
- Debt Reduction: Since 2020, net debt has been reduced by S\$483 million, with costly offshore loans now accounting for just 2.7% of total debt (down from 31% in 2020). The group is committed to a further S\$43m–S\$63m debt repayment plan over 2026–2027.
- Interest and Hedge Cover: Effective interest cost was 3.4% (up from 3.3% in 2025). Hedge cover decreased to 76% (from 90%), possibly exposing future earnings to greater interest rate volatility.
- Cash Flow: Q1 2026 net cash flows (EBITDA less capex) were S\$23 million, sufficient to support both debt servicing (S\$12m) and interest (S\$9m), underpinning the sustainability of current financial policies.
- Net Assets: Net assets stood at S\$708.7 million as of 31 March 2026, with total assets of S\$1,964.5 million and total liabilities of S\$1,255.8 million.
2026 Outlook and Guidance
- Distribution Policy: FY2026 guidance of 0.80 cpu is reaffirmed, subject to no material changes in planning assumptions. This is a notable reduction from the 1.05 cpu paid in each of the past three years, reflecting a more cautious approach to capital management.
- Operating Performance: Subscriber base is expected to continue to grow, driven mainly by broadband, even as basic cable TV churn persists. However, ARPUs and EBITDA are anticipated to remain under pressure due to ongoing competitive dynamics and pricing constraints.
- Capital Expenditure: Capex will remain at 10%–15% of revenue to support broadband network expansion and customer acquisition, especially for higher-speed plans and bundled services.
- Debt Repayment: Scheduled repayments remain a focus, with any excess cash flows to be directed toward discretionary debt reduction.
Key Risks and Shareholder Considerations
- Distribution Cut: The reduction of DPU from 1.05 cpu to 0.80 cpu for FY2026 may be price sensitive and could affect the share price, given its direct impact on yield expectations for income-focused investors.
- Elevated Leverage: The net debt/EBITDA ratio remains high at 7.6x, highlighting ongoing leverage concerns. While management is committed to deleveraging, lower EBITDA and higher net interest costs could put pressure on future financial flexibility.
- ARPU and EBITDA Pressure: Both ARPU and EBITDA are expected to stay under pressure, potentially impacting profitability and future distributions.
- Hedge Cover Decline: The decrease in hedge cover (from 90% to 76%) may expose earnings to greater interest rate risk.
- Growth Reliant on Broadband: The business is increasingly reliant on broadband growth to offset declines in traditional cable TV, making execution on upselling and customer acquisition strategies critical for future performance.
Conclusion
APTT’s Q1 2026 results reflect the ongoing transformation from a cable TV-focused business to a broadband-led growth model. While broadband expansion and disciplined debt management are positives, investors should note the cut in distributions and high leverage, both of which may be price sensitive. The reaffirmed focus on broadband, prudent capex, and active debt reduction will be key to future value creation and risk mitigation.
Disclaimer
This article is for informational purposes only and does not constitute investment advice or a recommendation to buy, sell, or hold any securities. Investors should conduct their own research and consult with professional advisers before making any investment decisions.
