TELCOs – CIMB
SingTel directed to share BPL
In a surprising move, the regulator has directed SingTel to cross-carry the 2013-16 seasons of the Barclays Premier League. This is despite SingTel having non-exclusive rights to the BPL, which allows it to not share its content. This raises the question of MDA over-ruling again.
StarHub stands to gain a little as this lowers the likelihood of churns and generates revenues from providing cross carriage. It is a setback for SingTel in its efforts to build up a pay TV franchise. All in, this development does not change our forecasts and views on SingTel and StarHub. The sector remains a Neutral with M1 (Outperform) as our top pick.
In a surprising move, the Media Development Authority (MDA) has directed SingTel to cross-carry Barclays Premier League (BPL) 2013-16 seasons. This is despite SingTel acquiring the rights to the BPL on a non-exclusive basis, which it is not required to share. SingTel said it will “appeal this decision and seek legal recourse if necessary”. It added that customers who wish to watch BPL on its own (via cross carriage) will most likely have to pay significantly higher monthly fees.
What We Think
MDA’s decision surprised us as it contradicts its cross-carriage ruling that was enforced in March 2010. The MDA ruled that holders of exclusive content are obligated to open their content while holders of non-exclusive content are not required to share. With this about-turn, it raises the question of MDA over-ruling again in the future. This is a major setback for SingTel in its quest to capture a bigger piece of the pay TV pie. By having to share the BPL, SingTel’s ability to have users sign up to mio TV is sharply reduced. This ruling is a small positive for StarHub as its customers can now subscribe for BPL directly from SingTel without having to sign up with SingTel’s overall pay TV service. This reduces the likelihood of StarHub’s customers leaving for SingTel.
What You Should Do
Stay invested in M1, our top Singapore telco pick. While positive for StarHub, this regulatory outcome does not change our Neutral recommendation on StarHub. The negative impact on SingTel reinforces our Underperform recommendation on the stock.