Category: SingTel
TELCO – CNA
Regulatory changes best bet for StarHub, say analysts
StarHub’s stock price has come under pressure of late, following news that it had lost the rights to broadcast English Premier League football matches in Singapore.
And it took another hit this week when it became the only player not offering the popular iPhone.
With sentiment in its outlook depressed, market watchers say StarHub’s best bet for a change of fortune will be for authorities to make content sharing compulsory.
StarHub is clearly in damage control mode, trying to find its footing again after having lost the rights to broadcast EPL matches in Singapore.
Investors started selling out, with the counter now down by some 10 per cent since the news broke – from S$2.17 per share on September 30 to S$2.02 at closing on October 14.
Market-watchers say it is going to get tougher, now that M1 is also selling the iPhone, leaving StarHub as the only telco in Singapore not carrying the popular mobile handset.
At least three brokerages downgraded their calls on the counter this month. But some analysts say they started to hold a pessimistic view even earlier.
Gregory Yap, senior investment analyst at Kim Eng Research, said: “I took the view that if StarHub were to win the EPL rights, it would have meant that they would lose more money in pay-TV, which is already a loss-making enterprise for them.
“And if they were to lose the EPL rights as what has turned out, then they would start to lose their subscribers to SingTel. Either way it was no-win scenario.”
Analysts say StarHub’s best hope for a turnaround may be a change in regulations to allow content-sharing. This could allow for the resale of broadcasting rights and allow other media companies to screen EPL on their own platforms.
But it is still uncertain if changes will happen at all. It would also depend on whether the EPL allows this for Singapore.
Meanwhile, M1 has become a favourite with analysts – because it is seen as having avoided a bruising battle for the football rights.
One reason is that it had escaped what has been labelled a bruising battle for the football broadcast rights, and has been able to focus on steadily improving their market share.
The view on SingTel is also optimistic due to its strong balance sheet, which can help it tide over short-term losses more easily than its rivals.
But some say it may be a good time to move away from the defensive telco industry and capitalise on high-beta stocks instead.
Roger Tan, vice president of SIAS Research, said: “In a good time, you would see higher beta stocks rising faster than the underlying STI. At this point of time, with the economy recovering, and investors coming back into the market to pick on good stocks, investors may be able to enhance their returns more with taking higher beta stocks, rather than being defensive with the telco side.”
Analysts are expecting results for the telco sector to show growth for the third quarter, and some are waiting till then to review their stock calls. – CNA/de
M1 – BT
Monopoly ends as M1 hooks up with iPhone
SingTel’s exclusive reign over, iPhone prices may fall
MobileOne has finally been given a bite at the iPhone, a move which breaks Singapore Telecommunications’s year-long stranglehold on the coveted touch-screen handset.
The iPhone will go on sale at M1 stores within the next two months after Singapore’s smallest operator announced yesterday that it has sealed an agreement with Apple to bring in the device.
New M1 price plans will also be introduced to accompany the iPhone but these will only be announced closer to the launch date, the firm said a briefly-worded statement.
As reported by BT on Monday, Apple has been in talks with both M1 and StarHub in the last few months as part of its global strategy to ramp up iPhone sales but a deal could not be reached earlier despite repeated appeals from their customers.
The need to commit to a high sales volume and revenue-sharing were among the factors which led to the initial impasse. This left SingTel with a default monopoly on the iPhone even though exclusivity is not a condition in its contract.
With the conclusion of the M1-Apple deal, StarHub stands as the only local telco without access the touch-screen gizmo. However, company spokesman Michael Sim said that StarHub is ‘still interested to bring the iPhone’ to its customers.
SingTel was given first dibs at selling the iPhone 3G in Singapore in August last year and this arrangement was extended to the latest model – the iPhone 3GS – this July.
Consumers currently pay nothing to $678 for an iPhone at SingTel, depending on the choice of subscription plan. With the loss of its exclusive reseller rights, market watchers say that iPhone prices could fall to reflect the new market duopoly.
‘With SingTel losing its reseller rights to the exclusive iPhone, pricing is likely to come down, implying higher subsidies,’ said DBS Vickers analyst Sachin Mittal.
‘The iPhone has always been a multi-operator offering in Australia, its strongest market in APEJ (Asia-Pacific excluding Japan),’ added Aloysius Choong, a research manager with technology analyst firm IDC Asia-Pacific.
While a smaller price tag is undoubtedly good news for consumers, resellers such as SingTel and M1 will have to wait longer to recoup their iPhone subsidies.
‘Instead of an estimated six to nine months break-even time for the iPhone deal with customers, it may take up to one-year for operators to reach the break-even point if prices come down,’ Mr Mittal said.
SingTel, StarHub – BT
SingTel, StarHub to face off again in World Cup 2010
Bidding now open; results expected to be announced in next six months
Singapore’s two pay-television rivals will lock horns on the soccer pitch once more in their bid to snap up broadcast rights for the upcoming Fifa 2010 World Cup tournament.
Singapore Telecommunications has confirmed that it will be looking to add the World Cup trophy to its string of sports programming triumphs over StarHub.
‘Yes, we plan to throw our hat into the (World Cup 2010) ring as well,’ SingTel Singapore CEO Allen Lew told BT in a recent interview.
If SingTel succeeds in it bid for the event, which kick-offs next June in South Africa, it will corner nearly all major soccer-related content in the local pay TV market.
On Oct 1, the operator landed the exclusive right to screen the 2010 to 2013 seasons of the coveted English Premier League (EPL), the crown jewel of StarHub’s sports programming for the last 12 years.
SingTel also has access to the Uefa Champion’s League and Europa League, as well as the Italian Serie A on its mio TV platform. In addition, it has sports channels from ESPN Star Sports under a three-year content partnership.
ESPN Star Sports has already won the rights to broadcast Fifa World Cup 2010 in a number of countries in the Indian sub-continent including India, Pakistan, Bangladesh and Sri Lanka. The company declined to comment when asked if it is looking to add Singapore to the list.
StarHub however, will be looking to even the score with SingTel after its recent EPL loss.
‘We are in talks with Fifa on the World Cup broadcast rights,’ admitted company spokeswoman Jeannie Ong.
StarHub was the sole official local broadcaster for the 2006 World Cup in Germany. At that time, it introduced a special pay-per-view package that contained live telecasts of all 64 matches, along with prime-time repeats and match highlights.
The operator also signed a contract with MediaCorp to allow the latter to screen four key World Cup 2006 matches on its free-to-air channels.
As at April this year, Fifa has tied up media deals with 199 companies around the world for World Cup 2010. Besides ESPN Star Sports, other regional rights holders include M-League Marketing and Middle Eastern media conglomerate International Sporting Events.
A fresh round of bidding is now open and the results should be announced within the next six months.
Fifa does not disclose the value of individual bids but media rights typically account for the lion’s share of the tournament’s revenue. In 2006, the 1.2 billion euros received from media companies accounted for around 63 per cent of the event’s combined takings.
SingTel – BT
SingTel wires up to score with business
Coaxial cabling technology to help bring EPL matches to commercial pay-TV clients
Fresh from announcing its consumer pricing for the English Premier League matches, SingTel reveals that it has another plan up its sleeve.
The telco has been quietly conducting in-house trials aimed at allowing potentially tens of thousands of local businesses to tune in to the next season of the popular soccer tournament in August 2010.
Field deployment of the networking technology to wire up this lucrative customer segment will begin in the coming months.
In a phone interview with BT on Saturday, SingTel Singapore CEO Allen Lew said the company has carried out a series of in-house ‘technical laboratory trials’ to determine the feasibility of using coaxial cabling systems to carry its pay-television signals.
This approach is different from the technology used by SingTel’s existing mio TV platform. The operator’s pay-TV programmes are currently streamed over the Internet using its ADSL (asymmetric digital subscriber line) broadband infrastructure.
With this method, customers are still required to have a phone line and there are also bandwidth limitations which could inhibit the number of high-definition channels that can be streamed at any one time.
The existing ADSL technology is also unsuitable for businesses such as hotels, restaurants, pubs and coffeeshops looking to screen soccer matches over multiple television screens within their premises. This is an important consideration for pay-TV operators as commercial customers typically pay twice or more for their subscription packages compared to consumers.
While the future nationwide fibre-optic network could solve the problem, the project is still a work-in-progress and it will only be fully completed in December 2012, towards the tail end of SingTel’s three-year EPL broadcast contract.
Coaxial cabling technology, on the other hand, has been used by StarHub and many telcos around the world to deliver their cable television and broadband services to consumers and businesses for some time. Coaxial cabling and ADSL lines are the two most prevalent copper-line networking technologies used by telcos today.
Coaxial cables are cheaper and faster to deploy compared to fibre-optic cabling while having a sufficient capacity to carry multiple channels of high-definition video and Internet content.
‘We will use our existing copper (cables),’ said Mr Lew.
SingTel currently owns the most extensive underground broadband infrastructure in Singapore, a complex mishmash of fibre-optic links and cheaper copper cables at the ‘last mile’ which connects to homes and businesses.
SingTel’s coaxial cabling plan looks to be the final piece of jigsaw to fulfil its promise of wiring up all homes and businesses ahead of the 2010 EPL season. It means the telco will be banking on a combination of technologies, including ADSL, fibre-optics and coaxial cabling, to meet this ambitious deadline.
‘The business community is where we are fundamentally strong,’ said Mr Lew. Dedicated account teams will be set up to service commercial pay-TV customers but pricing will be determined on a case-by-case basis as their needs are different, he added.
StarHub had questioned SingTel’s ability to pull off the feat of wiring up Singapore for EPL within 10 months but Mr Lew is bent on proving his arch-rival wrong. ‘We have never said something and not delivered,’ he stressed.
SingTel already held up its promise of not charging consumers more for EPL with the announcement of its price plans on Saturday.
Consumers will have to pay $23 a month to catch the 2010-2011 EPL season on mio TV without having to fork out extra for a basic pay-TV package or for set-top box rental.
As an added sweetener, SingTel will even throw in the Uefa Champion’s League and Europa League matches for free. For an additional $2, customers will get additional channels from ESPN Star Sports, the company which owns the broadcast rights to a bonanza of other sporting events including the Formula One, the Australian Open, Wimbledon and the US Open Golf Championship.
StarHub customers currently pay around $52 for their football fix. This includes a $25.58 monthly subscription fee for the firm’s basic tier, as well as the $26.75 it charges for the sports package.
Some market watchers have questioned SingTel’s ability to recoup its hefty EPL investment since rival StarHub and even Hong Kong’s PCCW failed to make money from screening the coveted soccer league.
But said Mr Lew: ‘We don’t just look at it (EPL) on a narrow basis – there’s a huge impact on our overall consumer business. We know what we have to achieve to make it (EPL) value-accretive.’
TELCO – Kim Eng
Telco Sector Update
Previous day closing price: StarHub $1.97, SingTel $3.08
Recommendation: StarHub Sell (maintained), SingTel Buy (maintained)
Target price: StarHub $1.80, SingTel $3.51
SingTel relieves football fans’ worries…
SingTel has sprung a surprise on consumers and stolen a march on StarHub. From Aug next year, it will cost only $25 a month to watch BPL and other sports content on mio TV ($23 for just BPL) versus $49 for StarHub. Unlike StarHub, there is no basic tier fee, while UEFA Champions League and Europa League as well as the first set-top box (in high definition) are also free. While households without a fixed phone line will need to pay a monthly charge, we estimate consumers will still stand to save 39-55% over StarHUb’s present charges.
…and goes for StarHub’s jugular
By making its pricing for sports content so attractive and announcing it just 10 days after it won the BPL bid, SingTel has made the consumer’s decision to switch an easy one and made StarHub’s response so far (e.g. calling for public consultation over SingTel’s win, waiving termination fees for those who recently signed up just for BPL, etc) pale in comparison. The only stumbling block now lies in the unwieldy arrangement where dual provider households need to have two set-top boxes. While there is still a need for a fixed phone line, the NGNBN will do away with that requirement once it is up and running.
SingTel’s moves are rational despite price aggression
Although SingTel is unlikely to recoup the cost of BPL through Pay TV subscriptions alone, we reckon it will unveil higher-priced, higher-value bundles to attract subscribers to buy its broadband and mobile services as well. Also, SingTel may increase prices for future seasons. There is a good chance it will be able to make this a profitable proposition when viewed from a triple-play perspective and on a three-year horizon. In addition, the advent of NGNBN will make the local telco scene even more competitive and SingTel’s move to secure market share ahead of that seems a rational one despite its willingness to drive up content costs.
StarHub could be in for more pain
In the next 12-24 months, we think SingTel is very likely to use its deeper financial pockets to pursue the acquisition of other sports content such as World Cup as well as entertainment and news channels such as CNN, CNBC, Discovery, HBO and Cinemax. Success in this arena as well as the closing of the technological gap between SingTel and StarHub (SingTel has promised to deliver mio TV access to the whole country by 31 July 2010) could potentially mean more pain in store for StarHub.
Recommendations maintained
On balance, we maintain our present recommendations – Buy for SingTel with a target price of $3.51 and Sell for StarHub with a target price of $1.80.