Astro Indonesia suspension – Sabotage or Exit Plan?

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Apr 14 2008
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Astro Nusantara (PT Direct Vision), the Indonesian unit or branch of Astro All Asia Network Plc (KLSE: ASTRO, stock-code 5076) seems to be having some serious problems. It has been ordered by Indonesian Information and Communications Ministry to temporarily halt broadcast pending the fulfillment of several requirements and the transmission was off since 10 a.m. last Friday, 11 Apr 2008.

Thousands of subscribers are fuming for being left in the dark and are demanding refunds with some threatening to cancel their subscription, especially the soccer fans who missed the live EPL (English Premier League) match between Manchester United and Arsenal on Sunday. It was reported that PT Direct Vision which is under Lippo Group, the same company that owned KabelVision but rebranded as First Media received a whopping 18,000 complaints from its customers since the indefinite suspension.
Astro Indonesia suspensionWhy the sudden disruption? Indonesia’s Department of Communications and Information director general Basuki said Astro Nusantara has not solve the issue of radio station permit, operation inspections and fees not paid for the right to use the broadcasting frequencies. However there’re reports that claimed Astro has actually paid the broadcasting fees but rumors added that its competitor, Indovision, was trying to sabotage Astro by “asking” government officials to conduct the “raid”. It was a known fact that Indovision lost considerable amount of customer since it lost the EPL rights to Astro.

In reality, doing business in Indonesia could be very tricky. Heck, any people who do not like Astro could charge that the company is against the Indonesian Satellite Ananda Indonesia Astro ventureCommunications Law simply because Astro is using foreign satellite (Malaysia’s Measat). On the other hand, this could be a good example of whatever goes around comes around. Foreigners who would like to do business in Malaysia often hit the wall due to numerous bias and racial policies. It’s not too much to say Astro and to some larger extent other Malaysian companies which were attracted to Indonesia market taste their own medicine, only this time the corruption is on a much bigger scale.

However assuming the bad boy Astro didn’t abide Indonesian laws and broke all the laws mentioned. What was the intention then? Maybe Astro realizes that it’s high time to pull out from Indonesian soil altogether since the early dream to serve 3 million households, nearly 10% of all homes with TVs in Indonesia by 2010, is just a bad dream after all. If this is true then it’s definitely good news to Astro shareholders because the venture is dragging down Astro without clear sign when it’s going to end. It might be a total loss of RM200 million to end this expedition but to continue spending RM20 million a month to stay afloat, you don’t need a rocket scientist to make the decision.

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