Astro All Asia Networks Plc will not renew its trademark licence agreement, which expired on Aug 31, with Lippo group’s PT Direct Vision (PTDV), an Indonesian pay-TV provider, after a long and publicised tussle.
In a statement to Bursa Malaysia yesterday, Astro said it had decided to withdraw all support and services provided to Lippo, including the use of the “Astro Nusantara” brand.
The termination notice was issued after Lippo failed to settle the outstanding invoices amounting to RM805mil for Astro’s support and services. It had required Lippo to make the full payment by Sept 1, failing which Astro had the right to terminate the agreement.
However, out of good faith, Astro has granted further extension of the trademark licence agreement to Sept 30 to enable PTDV to make alternative arrangements to minimise the impact on its customers.
Astro has been funding PTDV RM20mil a month to run its services. It confirmed that all expenses incurred in PTDV had been accounted for and it expected to write down an additional RM200mil if it broke ties with Lippo.
Astro is committed to retain its position as a supplier of TV channels, channel content and broadcast services to the pay-TV sector in Indonesia.
Three years ago, Astro and Lippo entered into an agreement to become joint-venture partners with 51% and 49% share respectively.
Although subsequently the Indonesia Government changed broadcasting rules which limited foreign equity participation to 20%, PTDV had received approval to operate under its existing licence and approvals while the application for new broadcasting licence was being processed. This scenario led to Astro allowing PTDV to use the “Astro Nusantara” brand name.
Based on their earlier principle term agreement, Astro believed that any outstanding details would be discussed in good faith and the revised joint-venture agreement that complied with new regulation could be reached.
Nevertheless, Lippo continued to delay and did not take any relevant action to conclude the joint venture.
In addition, it had suggested an unacceptable takeover of its interest by a third party, which triggered Astro to withdraw its commitment with Lippo.
As at April 30, Astro had invested RM536mil with Lippo. Meanwhile, Lippo had not contributed any capital in this venture and Astro had solely supported the funding.
Currently, PTDV’s pay-TV business has over 100,000 subscribers.