StarHub – DBSV

Do exclusive content rights matter?

What’s new?

StarHub has clinched the exclusive rights for the UEFA Euro 2012 football tournament. This would trigger Singapore’s cross-carriage law for the first time since it took effect in August 2011. It is reported that these rights were negotiated mutually and there was no bidding process.

Our view

The impact on StarHub’s earnings should be minimal in either direction. This is not the most popular piece of content and there was absence of bidding. As such we assume that content-cost should not be a big burden for StarHub. SingTel appears to have stayed away as they paid a huge price tag for English Premier League (EPL) rights, leaving less headroom to pay for more content in our view.

Cross-carriage regulation does not address the bundling issue. In 2008, StarHub’s sports package customers paid S$10-S$20 to sign up while those not subscribing to StarHub’s sports package paid S$50. While cross-carriage regulation may help mio TV subscribers to watch these matches this time around, they could end up paying more in our view. Consumers can subscribe directly to StarHub (with or without sports package) rather than going through SingTel’s mio TV to enjoy savings through bundling discounts. In either case, StarHub would take care of billing the customers for UEFA Euro matches and will have a chance to re-engage them through promotions.

We prefer StarHub & SingTel over M1. We continue to like StarHub for its 7% yield. We also like SingTel for over 5% yield, slow migration to National Broadband Network (NBN) and growth prospects from emerging markets. M1 is least preferred due to slow progress on NBN and use of fair value accounting for smart phones.

Maintain BUY on StarHub with TP S$3.05.

StarHub – DBSV

Do exclusive content rights matter?

What’s new?

StarHub has clinched the exclusive rights for the UEFA Euro 2012 football tournament. This would trigger Singapore’s cross-carriage law for the first time since it took effect in August 2011. It is reported that these rights were negotiated mutually and there was no bidding process.

Our view

The impact on StarHub’s earnings should be minimal in either direction. This is not the most popular piece of content and there was absence of bidding. As such we assume that content-cost should not be a big burden for StarHub. SingTel appears to have stayed away as they paid a huge price tag for English Premier League (EPL) rights, leaving less headroom to pay for more content in our view.

Cross-carriage regulation does not address the bundling issue. In 2008, StarHub’s sports package customers paid S$10-S$20 to sign up while those not subscribing to StarHub’s sports package paid S$50. While cross-carriage regulation may help mio TV subscribers to watch these matches this time around, they could end up paying more in our view. Consumers can subscribe directly to StarHub (with or without sports package) rather than going through SingTel’s mio TV to enjoy savings through bundling discounts. In either case, StarHub would take care of billing the customers for UEFA Euro matches and will have a chance to re-engage them through promotions.

We prefer StarHub & SingTel over M1. We continue to like StarHub for its 7% yield. We also like SingTel for over 5% yield, slow migration to National Broadband Network (NBN) and growth prospects from emerging markets. M1 is least preferred due to slow progress on NBN and use of fair value accounting for smart phones.

Maintain BUY on StarHub with TP S$3.05.

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