Astro unit faces RM1.3b suit

Low-profile television support equipment provider, AV Asia Sdn Bhd, yesterday filed a suit against Measat Broadcast Network Systems Sdn Bhd (MBNS) and another company for alleged breach of a mutual non-disclosure agreement, claiming some RM1.3 billion in loss of potential profits.

In its writ of summons, AV Asia alleged that MBNS, a subsidiary of Astro, had used the former’s confidential information with regards to a technical solution to transmission disruption during rain to launch its recent product — Astro B.yond high-definition television.

AV Asia CEO V Vijayakumar, accompanied by his lawyer Ravi Sodhi, filed the suit at the Kuala Lumpur High Court registry yesterday morning. The case is expected to be heard at the intellectual property court here.

MBNS, which is under billionaire T Ananda Krishnan’s stable of companies, owns and operates Malaysia’s sole paid-satellite-television service, Astro. It holds the exclusive licence for direct-to-home transmission until 2017.

MBNS is wholly owned by Astro All Asia Networks plc, which was recently delisted from Bursa Malaysia following a successful privatisation by Astro Holdings Sdn Bhd.

According to the statement of claim, AV Asia contended that the Malaysian Communications and Multimedia Commission (MCMC) had in May 2008 suggested that MBNS find a solution to the “rain fade” problem it encountered.

MBNS is wholly owned by Astro All Asia Networks plc

(Rain fade refers to disruptions in satellite transmission during rainy weather.)

AV Asia said it then engaged Maspro Denkoh Corp, a Japan-based television support equipment and solutions company, to conduct research and development to produce a satellite dish which could reduce the disruption of transmission during rain.

According to AV Asia’s statement of claim, it then approached MBNS with its proposal and the two parties signed a mutual non-disclosure agreement dated Aug 1, 2008 to “facilitate the exchange of confidential information”.

AV Asia, in its suit, claimed that MBNS had disclosed confidential information to the bidders in a second tender exercise held on July 14, 2009, calling for bids to supply satellite dishes to MBNS.

AV Asia also alleged that MBNS had divulged some or all of the confidential information pertaining to the “rain fade” technology to the second defendant, Tele System Electronic (M) Sdn Bhd, in its design and testing of satellite dishes.

When asked by reporters outside the court, Ravi maintained that AV Asia had the right to file for legal action. He also said AV Asia and MBNS had met several times to settle the matter but discussions “recently came to an impasse”.

AV Asia is claiming RM1.34 billon in “loss of potential profits”.
The figure was arrived at based on the 7.3 million subscribers which MBNS is said to be targeting by the year 2020, and calculations which estimated the pre-tax profit  from each satellite dish at RM183.84.

According to Astro’s website, it currently serves some 2.93 million households across Malaysia and Brunei.

AV Asia is also claiming RM4.41 million it had purportedly invested in the research and development of its satellite dish. The company is asking the court to conduct an inquiry into the damages it is entitled to along with other damages and reliefs to be determined by the court.

Reached for comment, an Astro spokesperson said: “We have not been served with any legal proceedings thus far and are therefore not in a position to comment on the matter.”
This article appeared in The Edge Financial Daily, September 29, 2010.