Asian Pay Television Trust (APTT)

[weijian]

On refinancing, the CEO explained that loans were refinanced ahead of full tenure because scheduled principal repayments increase over time, and APTT’s EBITDA would not have comfortably covered the original repayment profile. In addition, management did not want to risk refinancing too close to maturity. For financial flexibility, APTT expects its onshore loans to be refinanced every 3–4 years rather than running the full 7-year tenure.

As a result, investors should expect recurring write-offs of unamortised financing fees. Although these fees are amortised over 7 years for accounting purposes, refinancing every 3–4 years requires the remaining unamortised portion to be written down upon each refinancing exercise.

Hi CY09,

I had talked about this "scheduled" write-offs back in late 2024.
https://www.valuebuddies.com/thread-3256...#pid172342

I am pretty sure this write off follows accounting rules and so one can't find fault with it. But I treat it as been aggressive accounting. When there are so many layers in the structure, the last thing an OPMI wants is "aggressive accounting".

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@Shrivathsa
There are generally just 2 ways to have double digit dividend yields (on a sustainable basis):

(1) Buy a relatively low dividend payout stock that use the majority of its retained earnings to build new BUs. With correct execution and some luck, the incremental returns from those retained earnings compound at double digits. After some time of consistent double digit compounding on those retained earnings, the OPMI will end up with double digit yields (at least on cost). Of course this takes quite some waiting. If the OPMI doesn't want to wait long, then there is the (2) as described next.

(2) A general (yet sharp) downturn that is not specific on the company or the industriy it operates in, and depresses its share price by double digits. And when the general downturn goes away and the company's share price recovers with its business intact, in the absence of heavy CAPEX requirements, the OPMI who timed his purchase/s astutely in the sharp downturn may end up with double digit dividend yields.

(1) and (2) are 2 specific ways with different timeframes. I do have a couple of double digit dividend yields (at least by cost) in my portfolio. In general, they are some combination of (1) and (2) happening in tandem. But none of them appears because there is neither (1) nor (2).

[CY09]

Besides interest costs, banks also earn arrangement fees during each refinancing exercise. For APTT, the latest refinancing carried a 2% arrangement fee, amortised over seven years.

However, if refinancing occurs again in 3–4 years instead of running the full tenure, the unamortised portion effectively accelerates, and a new arrangement fee is incurred. Economically, this means banks are capturing roughly an additional ~0.5% per refinancing cycle (assuming a 3–4 year effective duration), on top of the stated interest margin.

This is an adjustable lever — banks can tweak arrangement fees upward or downward depending on APTT’s perceived credit risk and bargaining power. If credit metrics weaken, this fee component can quietly increase even if headline interest margins appear stable.

At present, APTT’s interest expense is consuming an increasing proportion of its declining operating cash flow. This trajectory is not sustainable, interest is forming a larger and larger portion of the declining cashflow generated. CAPEX has to remain at 30 mil region in order to maintain its infra. Refinancing fees create an additional hidden cost layer.

One practical option would be a targeted equity raise to retire the S$35 million Singapore Term Loan, which carries the highest interest rate (~5%). This allows all cashflow generated in Taiwan to service its onshore TWD loan according to repayment scheldue or even make use of the weak TWD/SGD exchange rate now to change SGD to TWD

[CY09]

https://links.sgx.com/FileOpen/APTTAGM20...eID=886218

Attended Asian Pay TV AGM today. Here were interesting things I learnt

Question: Why so many Taiwan Households are on 300 Mbps or lower data speed broadband

Management highlighted that 200 Mbps is sufficient for a typical household in any part of the world*. In Taiwan, consumers are aware of this, generally more price-conscious and financially disciplined, with many recognising that 200–300 Mbps (or lower) meets their needs, making upselling difficult. In contrast, Singapore households tend to over-subscribe to higher-speed plans relative to actual usage possibly not being aware they require much lower speed broadbands, which supports higher ARPU for SG telcos.

Question: Why so many TBC cable TV subscriber are not taking TBC Broadband

Answer: Because many are on Chunghwa telecom (Taiwan national carrier). TBC has to do aggressive marketting to pry consumers from the incumbent broadband carrier. TBC says they are the no 2-3 for broadband in the areas TBC operate in

Other pointers: APTT’s maintenance capex is primarily for its existing coaxial cable network, while growth capex is directed toward fibre deployment for broadband expansion. Unlike Singapore, where NetLink Trust provides a unified national fibre infrastructure, Taiwan’s broadband rollout is largely driven by private operators. As each company builds and owns its own network, this often results in overlapping and duplicative infrastructure.

*Armed with this knowledge, I am going to sign up for 500 mbps - 1 gpbs fibre broadband in the future. This will save me SGD$20 monthly in the future

[specuvestor]

just-for-fun discussion 200-300Mbps is sufficient for individual or maybe household use but if you have more than 4 pax running zoom, netflix, k-drama and graphics etc all at the same time (esp at night... same dynamics as power usage pattern) then a 1Gbps pipe might not be sufficient and might be laggy... so it depends... and latency for gaming is another topic altogether, related but not the same as pipe

But I do think the 10Gbps pipe that SG telcos selling now are as overkill as 8k video or 48MP cameras

[CY09]

If you truly have 6 devices all running high-quality 4K video / graphics at the same time, the bandwidth requirement becomes quite meaningful — but still far below what most people think.

➕ Total for 6 devices

6 × 25 Mbps = 150 Mbps

4K streaming (Netflix / drama): ~20–25 Mbps
Zoom (even in HD/“4K” setups): ~3–8 Mbps (Zoom rarely uses true 4K)
Graphics-heavy apps / browsing: ~5–15 Mbps

If you experience lag, it’s usually not the speed but:

Weak WiFi signal in rooms
Too many devices on a basic router
Interference (common in condos/HDBs)

From chatgpt

[specuvestor]

Yes understand that's what I thought too but all these are theoretical numbers including the pipe throughput. Playbacks like streaming is different from on-the fly rendering. VoIP improved a lot past 20 years but still not as immediate vs voice channel, which you can see in news live video interviews.

Personally I can see the diff in a 5 pax household

[CY09]

https://links.sgx.com/FileOpen/APTTPrese...eID=888789

Q1 result is in and broadband continues to grow due to more broadband subscriber; ARPU is constant. Do note while EBITDA shows a 3.6% decline in TWD terms, the results include the 12+% Dada receives, so to APTT the decline is in fact way much higher. *Since Q12025, APTT owns the entire broadband business.

Slide 13 shows the trust progress in repaying the debt, a new slide- simple but tells us the debt repayment progress

I expect Net Debt to EBITDA to rise to 8 times but on a smaller debt amount. APTT is now downgraded as a "hold" stock to me, 0.8 cents DPU for a 8.6 cents stock. It is merely a dividend stock trying to pay down its debt with 65% exposure to a sunset industry. What surprised me is still how Taiwanese consumers are price sensitive/smarter than other country consumers such that they are reluctant to go to a higher speed broadband plan for their incumbent plans serve their purpose.

[CY09]

https://links.sgx.com/FileOpen/APTTPrese...eID=900954

While the decline in revenue has slowed in Taiwanese Dollar terms, the Strengthening of the Sing dollar has resulted in the revenue decline looking worse. Cash outlay for interest has increased with the expiration of the hedges. The trust is in a game of how fast it can delevers while net debt to EBITDA dosent rise too fast