StarHub – BT

Outgoing StarHub chief reveals his biggest regret

Network leasing deal with SingTel kept StarHub out of corporate broadband market

PUTTING pen to paper on a deal which led to a protracted lawsuit with its archrival and relegated StarHub to the sidelines of the lucrative corporate broadband market was the single biggest regret of StarHub’s outgoing chief Terry Clontz in his 10 years at the helm.

Singapore’s second-largest operator signed the network leasing agreement in question with Singapore Telecommunications in 2002 amid its merger with Singapore Cable Vision (SCV). This pact replaced a similar contract that SCV inked with SingTel back in 1995.

‘I was keen to get the (SCV) transaction completed after many months of negotiations, and in that haste, I unfortunately succumbed to the demands of our competitor (SingTel) to sign a network lease agreement that ultimately resulted in a time-consuming lawsuit,’ Mr Clontz told BT in an e-mail interview.

SingTel sued StarHub in 2003 for breaching the 1995 network lease deal as StarHub’s pay-TV unit had used its infrastructure to provide cable television services to 120 commercial and non-residential buildings.

What followed was a three-year legal tussle which eventually ended in SingTel’s favour as the courts ruled that the agreement was meant for serving residential customers only. The saga continued as SingTel appealed to recover damages and the matter was laid to rest only in 2007 after it reached an out-of-court settlement with StarHub.

‘What made it (the agreement) worse was that it contractually prevented StarHub from taking the benefits of a high-speed cable broadband network beyond the residential community,’ Mr Clontz said.

While StarHub could choose to lay its own cables to link up non-residential buildings, the prohibitive cost meant the firm largely stayed within its consumer boundaries in its first decade.

However, the operator will get a chance to banish old demons come end-2012 when Singapore’s new fibre-optic broadband highway – dubbed the Next-Gen NBN (National Broadband Network) – becomes fully operational.

StarHub currently has access to only 800 buildings within the central business district but this number will become 23,000 once the new network is up and running.

While Mr Clontz has set the wheels in motion for StarHub’s corporate push, the role of demon slayer will eventually be played by once-rival Neil Montefiore. The former chief of Mobile- One (M1) will take over the reins at StarHub from January after his predecessor retires and becomes a non-executive director with the telco.

‘I am not likely to take up another CEO role, as it would be difficult to find a position that I would enjoy as much as I have enjoyed working with the people in StarHub. But I may look for opportunities to use my international telecoms and media experience while spending more time with my family in the USA,’ Mr Clontz revealed.

‘I will not be active in the management of StarHub after Dec 31, 2009. Neil is more than capable to run StarHub without my help. In fact, I think it is important for any former CEO to step away completely and let the incoming CEO run the business as he or she sees fit.’

Although M1 and StarHub compete head to head on the mobile front, the two adversaries have increasingly been finding themselves on common ground in recent years.

For example, the duo joined hands last year to bid for the government tender for building the Next-Gen NBN. M1 is also leasing StarHub’s cable platform to offer its current residential broadband service.

However, the buck is likely to stop at such business tie-ups, and a much-speculated merger between the two is an unlikely outcome.

‘There was a time when I thought a StarHub-M1 merger made enormous sense for all the shareholders. That was when our combined market share was below 50 per cent, and before we each had built a 3G network,’ Mr Clontz said. ‘I think the difficulty now is that there would not be sufficient synergies in a merger to justify any transaction now.’

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