SingTel – OCBC

Wins UEFA Champions League Media Rights

Wins CL Media Rights from 2009-2012. Singapore Telecommunications (SingTel) has won the coveted media rights to the UEFA Champions League (CL) and UEFA Cup 2009-2012. Under the agreement, SingTel has the exclusive media rights across its mobile, Internet and mio TV platforms. SingTel plans to stream UEFA CL games both “live” and on-demand on mio TV, and the Internet via its IDEAS portal. It will also offer clips on its mobile service.

Pricing yet unknown. Pricing details are not available yet, but based on the current cost structure, viewers need to fork out an additional S$117.70 just to activate mio TV (S$53.50 for installation charges, S$64.20 for a phone modem) and also spend a minimum of S$16.05 monthly on its channels. Given the steep initial charge, we can expect SingTel to come up with promotional packages to encourage viewers to sign up closer to the telecast date (August 2009). So for now, we do not expect it to boost SingTel’s fledging mio TV base.

Minimal impact on StarHub. As for StarHub, where the CL has historically been shown on ESPN and STAR Sports at no additional cost to its sports subscribers, we do not expect any major setback; the Barclays Premier League (BPL) remains the crown jewel. Currently, StarHub subscribers pay S$25 for the Sports Group (BPL, FA Cup, England internationals and Spanish League) on top of S$24 for three Basic Groups. According to media reports, StarHub says it has no plans to reduce subscription rates in the wake of SingTel’s coup.

Sports fan may be the losers. Soccer fans, caught in the crossfire, are the likely losers in the latest development. Besides having to install additional hardware to receive mio TV, they would have to pay more in subscription fees; we estimate that for them to watch both the BPL and CL matches, they would have to fork out at least S$65.05 per month, an increase of 33% from August 2009, assuming SingTel does not charge extra for the CL telecasts.

BUY for defensive nature. Until we get a clearer picture of SingTel’s pricing structure, we maintain our estimates for now. As we also do not expect any major impact on StarHub, our figures remain unchanged. Nevertheless, we continue to like both the telcos for their defensive nature and retain our BUY ratings, with a fair value of S$4.35 for SingTel and S$3.51 for StarHub.

Source : OCBC Securities

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