Perils on both ends

• We attended StarHub’s conference yesterday and came out assured about its preparedness in the consumer market.

• However, StarHub needs to be cautious of new entrants in the low-end SME market. In the high-end corporate market, StarHub may not have all the ingredients of the recipe yet.

• SME and corporate market account for an estimated 15%-20% of group earnings. Continuing with 20 cents DPS may turn group equity negative in 2012F. Maintain Fully Valued.

New products, services plus hubbing advantage. StarHub would launch a new device “StarHub Wireless Home Gateway” which would provide wireless connectivity for all Internet devices at home. The Company intends to launch “Internet TV” with content from its pay TV, so that its program can be viewed over PC or TV anywhere in the world. StarHub would also introduce a new portal with latest multiplayer online games including F1 racing. In our view, StarHub’s content-experience and hubbing is a huge competitive advantage.

SME and corporate market is a bigger challenge. StarHub will maintain its existing fibre network of over 2000 km in addition to the new National Broadband Network. The company plans to offer managed services through alliances with various IT vendors as opposed to in-house IT competency of SingTel. While StarHub has access to only 800 buildings compared to over 20K buildings in Singapore, we can safely assume that StarHub would have covered the bigger customers first. In our view, many SME customers would incline towards lower pricing where smaller players like M1 and LGA have an advantage, as they do not have existing margins to protect. In the high-end corporate market, customers prefer managed services involving IT and global connectivity. Our talks with industry players suggest corporate customers prefer vendors with strong in-house IT competency, as independent IT vendors typically work with multiple operators to maximize their returns.

Perils on both ends

• We attended StarHub’s conference yesterday and came out assured about its preparedness in the consumer market.

• However, StarHub needs to be cautious of new entrants in the low-end SME market. In the high-end corporate market, StarHub may not have all the ingredients of the recipe yet.

• SME and corporate market account for an estimated 15%-20% of group earnings. Continuing with 20 cents DPS may turn group equity negative in 2012F. Maintain Fully Valued.

New products, services plus hubbing advantage. StarHub would launch a new device “StarHub Wireless Home Gateway” which would provide wireless connectivity for all Internet devices at home. The Company intends to launch “Internet TV” with content from its pay TV, so that its program can be viewed over PC or TV anywhere in the world. StarHub would also introduce a new portal with latest multiplayer online games including F1 racing. In our view, StarHub’s content-experience and hubbing is a huge competitive advantage.

SME and corporate market is a bigger challenge. StarHub will maintain its existing fibre network of over 2000 km in addition to the new National Broadband Network. The company plans to offer managed services through alliances with various IT vendors as opposed to in-house IT competency of SingTel. While StarHub has access to only 800 buildings compared to over 20K buildings in Singapore, we can safely assume that StarHub would have covered the bigger customers first. In our view, many SME customers would incline towards lower pricing where smaller players like M1 and LGA have an advantage, as they do not have existing margins to protect. In the high-end corporate market, customers prefer managed services involving IT and global connectivity. Our talks with industry players suggest corporate customers prefer vendors with strong in-house IT competency, as independent IT vendors typically work with multiple operators to maximize their returns.

StarHub unveils new corporate services

Telco seizing market opportunity as Next-Gen NBN opens for business

THE arrival of Singapore’s new fibre-optic network gives StarHub a chance to re-enter the exiled market for providing corporate connectivity – and the operator is wasting no time in seizing this market opportunity.

The telco yesterday unveiled a gamut of new business services that will give offices across some 20,000 locations everything from ultra high-speed broadband packages to Web-based storage and human resource automation tools.

This is the first time StarHub has been given access to such a large number of corporate offices, thanks to minting of the country’s government-backed Next-Gen NBN (Nationwide Broadband Network) earlier this week.

The Next-Gen NBN, a high speed fibre-optic backbone that promises to boost local broadband speeds more than tenfold, has already reached about 40 per cent of local households. It will be extended to cover all homes and offices by end-2012.

It officially opened for business on Wednesday. And four companies – Singapore Telecommunications, StarHub, M1 and SuperInternet – have already rolled out new services within the short two-day time-frame.

Before this network, StarHub had access to only 800 commercial buildings in Singapore – a mere fraction of SingTel’s corporate coverage.

A pact that SingTel and StarHub signed in 2002 prevented the latter from tapping on the former’s infrastructure to pursue this market, meaning the red camp remains the dominant player in the area of corporate connectivity.

‘Businesses in these buildings will have a choice of service provider for the first time,’ StarHub chief Neil Montefiore told reporters at a briefing yesterday.

‘For years, buildings were all controlled by a single service provider,’ said StarHub’s chief operating officer Tan Tong Hai. ‘With more choices comes better pricing, better resiliency.’

According to market watchers, the corporate segment is a much bigger revenue opportunity for StarHub than the consumer market where margins are usually constrained by cutthroat competition.

Banks and large corporations, for example, are required to have so-called redundant technology set-ups to protect their critical information.

This is so data can be backed up via an alternative network should the primary Internet pipe fail. Such requirements present StarHub with a sizeable business opportunity, analysts say.

For a start, the company has introduced a new fibre-optic based broadband package that promises to give companies blazing download and upload speeds of 100Mbps (megabits per second) for $268 a month.

These speeds were previously off-limits to budget-conscious small businesses but the Next-Gen NBN has helped to bring pricing down to the SME range, Mr Tan said.

StarHub is hoping to tug at corporate purse strings with a range of other offerings, including connectivity packages that will link a company’s headquarters with its retail outlets or branch offices island-wide.

In addition, it has partnered several technology companies, including Hitachi Data Systems and Germany’s Wincor-Nixdorf, to offer add-on services such as Web-based backup and point-of-sale solutions.

On the heels of rivals SingTel and M1, StarHub also took the wraps off four-new high-speed consumer broadband plans.

By paying a monthly subscription of $68 to $103, consumers will enjoy downlink speeds of between 100Mbps to 200Mbps and receive a major boost in upload speeds. This means users can expect speedier music or movie downloads and the time taken to upload pictures and videos will be slashed as well.

StarHub also unveiled a 1Gbps (gigabit per second) offering, a plan that is 10 times faster that its existing premium cable broadband package, for $396 a month. M1 charges $399 for similar speeds.

With the introduction of its fibre-optic access plans, the operator plans to revise its stable of cable Internet packages by slashing prices or boosting download speeds in the near future, said Chan Kin Hung, StarHub’s head of products and solutions.