Category: SingTel
Pay TV – CNA
Pay TV providers now required to cross-carry exclusive content
With immediate effect, Pay TV providers which acquire exclusive broadcast rights to any programme, must cross-carry each other's content.
This applies to any contract signed or renewed from March 12. It does not affect existing contracts.
The fierce bidding over rights to broadcast the upcoming World Cup matches raised concerns over the issue of 'exclusive' rights, which has affected consumers in the Pay TV market.
To lock out competitors, Acting Minister for Information, Communications and the Arts Lui Tuck Yew said on Friday said Pay TV operators are willing to fork out substantial amounts for exclusive rights.
This has led consumers to cry foul, especially since they have to subscribe to both SingTel and StarHub – rivals in Singapore's PayTV market – for example, to catch their favourite football teams in action.
This practice of holding on to exclusive content though is rare in international markets.
Mr Lui said: "Content costs now constitute a significant percentage of pay TV operators' revenue, compared to international benchmarks. For example, SCV's content costs to revenue ratio has risen from 40 per cent prior to 2007 to close to 70 per cent today. This is much higher than the average 40 per cent for Pay TV operators in most other countries, including US, UK and Hong Kong.
"Secondly, Singapore suffers from a high degree of content fragmentation compared to other countries. Out of 179 channels today, only seven channels are common to both SCV and SingTel. An international benchmarking exercise using a group of 16 popular channels showed that Singapore was the only country with exclusive arrangements for all 16 channels.
"MDA's (Media Development Authority) review has concluded that this situation is unlikely to self-correct in the near future, and steps need to be taken to address this market failure".
So under the new Media Market Conduct Code, there will be a Public Interest Obligation. This means Pay TV providers must cross-carry each other's exclusive content.
For example, if SingTel acquires a new channel exclusively, it must make this channel available to StarHub.
StarHub must carry this programme at the same time SingTel is airing it – and vice versa.
StarHub also cannot make any modifications to the content.
This includes all the advertisements and branding SingTel may have embedded into the programme.
And SingTel will have to pay StarHub to carry its exclusive content.
It will be left to the telcos to work out a cost for this.
For consumers, it means that they can watch an exclusive channel through just one Pay TV retailer.
Consumers, regardless of which Pay TV service provider they belong to, will be charged the rate that has been stipulated by the original content provider. In the case of the example, whatever SingTel charges its customers for the exclusive content, StarHub customers will pay the same rate.
Mr Lui elaborated: "Consumers would no longer require multiple set-top boxes or switch retailers each time the rights of exclusive content changes hands. This will facilitate greater consumer access to pay-TV content, and re-focus competition to other aspects, such as service differentiation and competitive packaging".
For the industry, it means opening up the market to new players.
The rights holder will be able to brand the exclusive content, market it and monetise it as it wishes.
While the law takes immediate effect, the actually sharing of content is likely only to take place from September. For now, MDA will consult industry players, and sort out the details, like how consumers' bills will look like, and whether the review will affect new media platforms.
As for how this will impact the broadcast of World Cup matches in Singapore, it is status quo for now, as SingTel and StarHub have submitted a joint bid and are waiting for FIFA's reply.
Mr Lui said: "Let me just say that I am very happy that World Cup comes around only once every four years. We understand that SingTel and StarHub have recently made a new offer and negotiations with FIFA are still on-going. This is a commercial matter that is best left to the two pay-TV retailers and FIFA to settle.
"I know time is running short; we are well into the second half, we are approaching injury time, but we remain hopeful that the negotiations will reach a sensible outcome."
Meanwhile, Pay TV operators SingTel and StarHub have responded to the government's announcement on content exclusivity.
SingTel said it will review the details and actively engage the MDA through the industry consultation process.
StarHub said it fully supports the government's efforts to ensure fair and reasonable content costs. It also added that it supports the idea of a common set-top box for consumers.
MediaCorp also spoke to Singaporeans for their views.
One person said: "If a particular coverage has got wide appeal, like it is a national event or an international event, I think this should be made readily available, preferably free, if not, (at) a very reasonable rate to the consumers."
Another commented: "If this new initiative comes up, there is no edge by one service provider over another."
Analysts have said consumers will benefit from the move requiring Pay TV operators with exclusive content to allow such programming to be carried by other operators.
Kenneth Liew, senior market analyst, IDC Financial Insights, said: "In terms of pricing, in future bidding, both companies are likely to not bid so much on exclusive content, because at the end of the day, the other party will get to screen it, so they will actually bid at more reasonable prices.
"This is good news for consumers, because the bid price being lower will actually bring down the cost for consumers as well." – CNA/ms
SingTel – BT
SingTel offers pay-TV buffet after mio outage
SINGAPORE Telecommunications will offer customers an all-you-can-watch pay-television buffet for three days to make up for its mio TV outage.
From March 19 to 21, mio TV subscribers will get to view all the broadcast television channels in SingTel’s portfolio for free. The buffet, however, does not include access to its video-on-demand offerings as well as US TV Packs, an ensemble of channels featuring popular shows such as Desperate Housewives and Gossip Girl.
This offer comes on the heels of a three-day mio TV blackout which left thousands of customers fuming last week. Close to six per cent, or around 10,000 subscribers, were shut out of SingTel’s pay-TV service as a result of a suspected software glitch. Customers flooded newspaper hotlines and forums with complaints after failed attempts to reach SingTel’s customer service desk.
According to SingTel’s website, the service has since been fully restored. Customers who are still experiencing difficulty are advised to turn off the power supply to their set top boxes and then switch it back on.
Last week’s outage occurred at a time when Singapore’s largest operator is launching an all-out pay-TV charm offensive after beating StarHub to score the broadcast rights for the next three seasons of the Barclays Premier League.
The coup helped lift SingTel’s mio TV base up by 23 per cent sequentially in the last quarter of 2009 to 155,000.
It added 29,000 new mio TV subscribers for the three months ended Dec 31, the largest quarterly gain since the inception of the service in 2007.
However, the surge in new sign-ups resulted in a manpower strain with some complaining of lengthy waiting times after putting pen to paper.
To resolve the issue, SingTel Singapore CEO Allen Lew previously said the firm has increased the number of installers to cope with the heightened demand. ‘After every single installation, our manager will call the homeowner. It’s not just a random sample check, it’s a 100 per cent check,’ he added.
TELCOs – CIMB
4Q09 results round-up
• No surprises in 4Q09; maintain UNDERWEIGHT. 4Q09 results of all three Singapore telcos were fairly in line, with typical seasonality. Highlights were: 1) rather poor service revenue growth although mobile revenue continued to improve; 2) weaker margins; and 3) continued ARPU and revenue pressure in fixed broadband and corporate data. We retain our UNDERWEIGHT position on the sector as we remain apprehensive about rising content costs, pressure on broadband ARPUs and escalating subsidies. While we leave our DCF-based target price of S$2.07 (WACC: 9.5%) intact, we downgrade M1 from Outperform to NEUTRAL as it has outpaced the market by 9% since our upgrade and our house continues to prefer higher-beta and cyclical stocks. Nevertheless, M1 remains our top Singapore telco pick for its capital-management potential and greatest upside to NGNBN. Avoid StarHub (UNDERPERFORM, TP: S$2.14) and SingTel (UNDERPERFORM, TP: S$3.30).
• Weak service revenue… Service revenue growth decelerated to +1.3% yoy in 4Q09, the second lowest ever, due partly to competition despite a recovering economy. M1’s mobile revenue was weak from lower voice usage and roaming in postpaid and IDD revenue. StarHub’s fixed broadband and corporate data revenue came under pressure from competition while SingTel’s IDD revenue was lower from lower rates. Mobile revenue grew 5% yoy in 4Q09, driven by growth at SingTel and StarHub from their larger customer bases.
• …and margins. EBITDA margins slipped from seasonality and iPhone-induced SACs. With M1 and StarHub launching iPhones, industry EBITDA margins fell 2.6% pts qoq to 33.5%, the lowest since we began keeping records in 1Q04. Fixed broadband and corporate data revenue remained weak as competition remained rather heavy in those business verticals.
• Uninspiring outlook. M1 and StarHub gave fairly lacklustre 2010 guidance but we believe M1 is low-balling expectations. We believe Singapore telcos will benefit from the recovering economy and rising tourist arrivals with the opening of two integrated resorts. M1 should benefit the most as it is a pure mobile operator. SingTel has maintained its muted guidance of low-single-digit growth for revenue and EBITDA for FY3/10 which should easily be achieved with the help of A$ strength and strong growth in its IT and Engineering division from NGNBN rollout. On the downside, we expect competition to stiffen in the residential and corporate broadband markets throughout this year while content costs should remain a medium to long-term issue. We do, however, expect heavy subsidies for devices to persist in line with recent trends.
SingTel – BT
Too early to judge Bharti’s Zain deal
FROM questions over the price it paid for the BPL (Barclays Premier League) to criticism surrounding the recent World Cup debacle, SingTel is finding it increasingly difficult to pander to market pundits.
In the latest development, SingTel’s international strategy has been called into question even though it has not done any shopping in the last two years.
In a report issued last week, Deutsche Bank analysts said they were ‘puzzled’ by SingTel’s support for Bharti’s US$10.7 billion bid for Zain Africa. ‘This is one of the few African portfolios potentially available, and it is not clear how SingTel’s shareholders benefit from indirect exposure to Africa’, the analysts said.
This criticism was undoubtedly fuelled by reports suggesting that Bharti may be overpaying for the African operations of the Kuwaiti sovereign wealth fund. In both instances (SingTel and Bharti), I feel market watchers may have been too quick in casting the first stone.
Much ink has been spilt about the merits and ills of Bharti’s bid but little has been said about the impact on SingTel, the Indian telco’s single largest shareholder.
It’s a sense of dejàvu for the Singapore operator, having been presented with an opportunity to dip its toes into African soil only months earlier. However, that fell through with the collapse of Bharti’s US$24 billion mega-merger with MTN Group last September.
Although the target markets are similar in both attempts, the bearing on SingTel shareholders is very different.
In the MTN deal, Bharti tabled a complex cash plus share-swap deal. This would result in an immediate dilution of SingTel’s stake and consequently drag down income contributions from one of its most profitable overseas associates. In the case of Zain, all signs are pointing to debt financing as the way to go for Bharti. If this is the case, the impact on SingTel’s near-term earnings is far less pronounced.
In addition, having a stake in an emerging telecommunications market such as Africa can only be beneficial for Bharti and SingTel in the long run.
Back on its home turf, the Indian operator is facing fierce competition from foreign entrants such as NTT Docomo and Norway’s Telenor. The price war is already taking its toll on the firm’s balance sheet with 10 straight quarters of declining profits.
For the first time in years, Indonesia’s Telkomsel zipped past Bharti to become SingTel’s highest overseas income contributor in the fourth quarter of 2009.
Bharti’s US$300 million investment in Pakistan’s Warid Telecom in January and its third attempt at muscling into Africa clearly show a strong resolve to spread its earnings base.
Furthermore, with China being out of bounds to foreign players, Africa and perhaps Eastern Europe are the only emerging frontiers left for telecommunications expansion.
A decade back, there were similar suggestions that at US$9 billion, SingTel may have overpaid for Australian operator Optus. Fast forward to the present, those market murmurs have now been silenced by Optus’ strong balance sheet.
Going by the prevailing market criticism, the same questions can be asked of SingTel’s loss-making investments in PBTL in Bangladesh and Warid in Pakistan. These will not yield any immediate shareholder benefit but they are clearly bets for the long haul.
Bharti’s overseas diversification should be viewed in a similar light. The fact that Zain’s African assets have attracted multiple suitors over the past six months should be proof of some collective wisdom rather than herd mentality.
And at $10.7 billion, Bharti’s latest bid is not far off from Vivendi’s rejected offer for Zain Africa last September, which was reportedly around US$10.5 billion.
Bharti should move quickly to articulate its funding plan and rationale behind the Zain bid. Until then, its code of silence can only fuel more speculation. Uncertainty breeds fear, as evidenced by Bharti shareholders’ frantic sell-off hours after the announcement.
If SingTel were to shoulder any immediate blame, its failing should lie in the fact that it could not stop its associate from making such piecemeal disclosures.
SingTel – BT
Bharti to complete Zain deal by April
Bharti Airtel is aiming to conclude its planned purchase of the African assets of Zain telecom by late April, it was reported on Saturday, as the Indian company’s chief defended the deal.
Bharti Airtel, India’s top mobile phone company, and Kuwait’s Zain said last week they would hold talks until March 25 to work out details of the proposed US$10.7 billion deal giving the Indian firm access to markets in 15 African nations.
‘Everything is on a pretty fast track,’ Sunil Bharti Mittal, chairman of Bharti Airtel, told India’s CNBC TV18 network, calling the proposed takeover ‘a great opportunity’ for the Indian company.
‘If we can complete our positioning on the deal on (March) 25th . . . then you should just await country approvals,’ Mr Mittal said. ‘My guess is that by the end of April, we should be looking good (for closure of the deal). This deal has no complications,’ he said.
Mr Mittal’s remarks came after shares in Bharti Airtel plunged 12 per cent in a week following the announcement of the offer, closing on Friday at 278.25 rupees.
Analysts have expressed worries that debt for funding the purchase could put pressure on Bharti’s balance sheet and that it was overpaying for poorly performing assets.
Late Friday, global ratings agency Standard & Poor’s placed Bharti on ‘creditwatch with negative implications’, warning its finances could be strained by debt to fund the deal and by the weak earnings of Zain’s African operations. – AFP