Category: StarHub
Telecom – BT
Buffet-style 3G pricing may go off the table
StarHub, SingTel may revise charges to deter hefty usage
(SINGAPORE) The telcos' crusade against virtually unlimited mobile data usage might soon be upon 3G shores. StarHub and SingTel are taking a good look at revising their 3G price plans, the two telcos told BT yesterday.
StarHub said that it may 'review current (3G) pricing plans and consider introducing usage-based data pricing', in response to BT's queries.
This, it said, was 'to ensure optimal network quality for our customers'. Currently, StarHub has three mobile broadband modem plans that offer unlimited data allowances. It also caps the local data usage bill at $30 a month for its mobile phone subscribers.
When it launches its own Long Term Evolution (LTE) – or 4G – network next year, it will not offer an unlimited data option, it said.
SingTel will be reviewing its 3G price plans, which include its mobile broadband plans that carry a data usage allowance of 50 gigabytes (GB).
This comes two days after it moved to start weaning high data-usage consumers off generous 3G data caps with a new 4G pricing structure.
By 2013, when 95 per cent of its users have access to the 4G network, new 4G data subscribers will have to make do with a 10GB cap on data, paying for the additional data that they use.
SingTel also revealed that 11 per cent of its 3G subscribers on dongles and tablets account for a staggering 60 per cent of data traffic.
'It's unsustainable and when you grow it, it becomes a challenge,' said Yuen Kuan Moon, SingTel executive vice-president, digital consumer group.
StarHub and M1 did not reveal their own data figures, but industry observers believe the usage patterns are similar to SingTel's.
M1 is staying tight- lipped on both its existing 3G price plans and approach to pricing LTE usage next year.
'We regularly review all our service offerings to ensure they are compelling and competitive,' its spokesman told BT.
It has the same narrow view of unlimited data usage, however. 'Mobile network resources are limited, and the experience of the majority of customers should not be adversely affected by a minority of customers who regularly consume large amounts of data.'
While SingTel's new 4G service currently applies only to dongle modems, StarHub's review of its 3G price plan could apply across several devices – dongles, smartphones and tablets.
Analysts have pointed out for a while that the real battle for average revenue per user will be fought not over the dongle platform, but on smartphones and tablets, where increasing data usage is cannibalising lucrative voice calls and SMSes.
Telecom – BT
Buffet-style 3G pricing may go off the table
StarHub, SingTel may revise charges to deter hefty usage
(SINGAPORE) The telcos' crusade against virtually unlimited mobile data usage might soon be upon 3G shores. StarHub and SingTel are taking a good look at revising their 3G price plans, the two telcos told BT yesterday.
StarHub said that it may 'review current (3G) pricing plans and consider introducing usage-based data pricing', in response to BT's queries.
This, it said, was 'to ensure optimal network quality for our customers'. Currently, StarHub has three mobile broadband modem plans that offer unlimited data allowances. It also caps the local data usage bill at $30 a month for its mobile phone subscribers.
When it launches its own Long Term Evolution (LTE) – or 4G – network next year, it will not offer an unlimited data option, it said.
SingTel will be reviewing its 3G price plans, which include its mobile broadband plans that carry a data usage allowance of 50 gigabytes (GB).
This comes two days after it moved to start weaning high data-usage consumers off generous 3G data caps with a new 4G pricing structure.
By 2013, when 95 per cent of its users have access to the 4G network, new 4G data subscribers will have to make do with a 10GB cap on data, paying for the additional data that they use.
SingTel also revealed that 11 per cent of its 3G subscribers on dongles and tablets account for a staggering 60 per cent of data traffic.
'It's unsustainable and when you grow it, it becomes a challenge,' said Yuen Kuan Moon, SingTel executive vice-president, digital consumer group.
StarHub and M1 did not reveal their own data figures, but industry observers believe the usage patterns are similar to SingTel's.
M1 is staying tight- lipped on both its existing 3G price plans and approach to pricing LTE usage next year.
'We regularly review all our service offerings to ensure they are compelling and competitive,' its spokesman told BT.
It has the same narrow view of unlimited data usage, however. 'Mobile network resources are limited, and the experience of the majority of customers should not be adversely affected by a minority of customers who regularly consume large amounts of data.'
While SingTel's new 4G service currently applies only to dongle modems, StarHub's review of its 3G price plan could apply across several devices – dongles, smartphones and tablets.
Analysts have pointed out for a while that the real battle for average revenue per user will be fought not over the dongle platform, but on smartphones and tablets, where increasing data usage is cannibalising lucrative voice calls and SMSes.
StarHub – Lim and Tan
• StarHub made its first share buy-back under the mandate to buy up to 171.587 mln shares: it bought 343,000 shares yesterday at $2.83 each.
• Under the previous mandate, StarHub bought a total of 2 mln shares.
• We believe StarHub’s program is simply one way to enhance shareholders value, other than paying good dividends.
• Quarterly dividend rate has been steady for a while at 5 cents a share, translating to 7.1% yield.
• We find this attractive enough, given the rich free cash flow the telco generates ($420 mln in year-to-date vs $308 mln a year ago), already sufficient to cover annual dividend payout of $343 mln.
• Besides, capex is obviously closely monitored, being capped at 12% of operating revenue. It was 8% in the ytd.
• This suggests room for an increase.
• We therefore maintain BUY.
TELCOs – BT
Telcos and the BPL’s moving goalposts
THE next cycle of bidding for the Barclays Premier League will be for the 2013- 2016 period. That is some ways off, which is a good thing. Analysts will need all the time they get to figure out who needs the BPL broadcast rights more: StarHub or SingTel?
What used to be so clear – that whoever exclusively carries the BPL is broadcasting king – is now more of a conundrum, thanks to the cross-carriage law.
Now, StarHub and SingTel will be more preoccupied with not ending up the court jester instead. With the cross-carriage law, whoever clinches the ‘exclusive’ rights will have to let its competitor air the matches for its own viewers.
This is good news for football fans, but it makes analysts wish for the good old days when SingTel had simply paid a large chunk of change for the 2010-2013 package of truly exclusive BPL rights.
Then, the moaning had been fairly straightforward – the bidding war over the BPL rights led to the Fifa World Cup people holding both operators hostage for World Cup 2010. Consequently, viewers paid about 4.5 times more to watch the World Cup in 2010 than in 2006. Everyone (especially those who bet against Spain) was unhappy.
Similarly, analysis had been relatively simple. Football fans swelled the ranks of SingTel’s mio TV subscriber base, which currently stands at about 335,000, up from 155,000 at the end of 2009. BPL had become a feather in mio TV’s cap and a thorn in StarHub’s side.
Now, both operators have their own reasons for not wanting to bid each other out of the BPL park; both will be able to offer it to their own viewers, whether or not they get the rights.
SingTel, chastened by its last BPL splash-out, might want to be seen exercising some restraint. StarHub, with almost 550,000 subscribers who will get the BPL in any case, does not need to fear attrition.
In one way, the cross-carriage law would have fulfilled its objective of trying to keep content costs under control.
But however tidy policy is, life is messier. So, StarHub and SingTel also have equally compelling reasons to have another bidding slap-fight.
‘It’s actually quite difficult to rate the impact on the whole thing,’ Nomura analyst Sachin Gupta told BT. ‘Either telco could pay over the top as the potential customers could increase a lot without much incremental cost (it can access customers across both platforms). But at the same time, the scope to win the customer outright could diminish a fair bit too.’
Anyone looking for clues in the recent Euro 2012 broadcast deal that StarHub won the rights to will be disappointed. Unlike the three-year BPL deal, it is a one-off event and SingTel’s lack of enthusiasm is no indicator of how it feels about the BPL. In Kardashian terms, Euro 2012 is the Khloe to BPL’s Kim.
SingTel, however, might have more to brace itself against. If one hazards a guess that a fair number of mio TV subscribers signed up just for the BPL while hanging on to the StarHub account to placate the missus, a lot might pivot on what they will do after 2013, when they can watch the BPL on StarHub as well.
Some attrition might be inevitable, regardless of whether SingTel clinches the 2013-2016 BPL rights.
SingTel’s solution, then, might come from outside football. ‘SingTel still needs a unique selling point, and (BPL) is the only USP. They don’t have the movie content nor the documentaries,’ an analyst with a local house told BT.
The cross-carriage law might work in SingTel’s favour, as it is already reshaping the way operators negotiate other types of content. Earlier this year, StarHub renewed its deal with Fox International Channels on a non-exclusive basis, leaving it open for the first time to other players such as SingTel.
While BT understands that SingTel might not have found Fox’s asking price to its liking, it could still go on to bid for other programmes as more non-exclusive deals are drawn up by its competitor.
With its current BPL dominance winding down in 2013, there is still time to beef up its portfolio. Similarly, local men will have enough time to find a real hobby. One that involves being outdoors.
StarHub – DMG
UEFA 2012 to Kick Off Cross Carriage Ruling
StarHub announced that it has obtained exclusive broadcast rights for the UEFA Euro 2012 football tournament, which will be jointly hosted by Poland and Ukraine from 8 June–12 July 2012. The rights fall under the government’s cross-carriage ruling that took effect from 1 Aug, which requires any content inked on an exclusive basis to be shared with other pay-TV operators.
OUR TAKE
Learning from the EPL days. We gather from media reports that the rights were awarded through a negotiated process, as opposed to conventional bidding, which probably also explains the relative cost discipline exercised by StarHub under the current cross-carriage regime. Management had previously stressed that economic sense would prevail in the subscription of exclusive content and that it would not be pursuing a loss leader product (foregoing the EPL rights to SingTel in 2009). Further details on the cross-carriage and pricing plans will be announced in due course.
Still keenly followed; a boost for sports content. Organized by the Union of European Football Associations (UEFA), Euro is a highly popular quadrennial football event that enjoys an almost cult following in Asia that is matched only by the popularity of the English Premier League (EPL) and World Cup. During the Euro 2008 championship, gross takings from the tournament across all media (TV rights, media sponsorship and ticketing) reached a whopping EUR1.3bn (20% or EUR280m from commercial rights alone), a 53% increase over that from Euro 2004. Euro 2008 broadcasts attracted on average 155m viewers globally per match (31 matches in total). We believe that management has taken into account various factors – such as the relatively high viewership ratings (possibly second only to the EPL), the boost to subscription and advertising revenue recorded during Euro 2008, and the value attached by sports subscribers to the Euro franchise – in procuring the exclusive rights for Euro 2012, after losing the EPL rights to SingTel in 2009.
Tapping into the fast expanding mio-TV base. We expect StarHub to make available the Euro 2012 matches across its pay-TV, mobile and broadband platforms in cementing its “hubbing” proposition, with price plans that are similar to Euro 2008. That said, the final subscription price to be levied would depend on commercial agreements entered into by the recipient/provider of the carriage with respect to carriage fees. StarHub is expected to ride on the new ruling to crosscarry content across SingTel’s mio-TV platform, allowing the former to tap on the latter’s strong pool of 335k subscribers, a sizeable proportion of which are former subscribers of its own sport package (prior to the lost of the EPL rights in 2009).
Minimal ARPU increment likely. For the Euro 2008 broadcast, StarHub offered a “Season Pass” for a one-off fee of SGD20/mth for sports group subscribers and SGD50/mth for non-sports group subscribers. We note that StarHub’s pay-TV revenue grew 5% q-o-q in 2QFY08, coinciding with the broadcast timeline, although this was offset by the 6% q-o-q expansion in cost of services line (where content cost is parked), which was likely driven by rights for Euro 2008. StarHub reported a 2k contraction in pay-TV subscribers vs the 23k added by SingTel in 3Q11.
Maintain NEUTRAL based on FV of SGD2.80. We make no changes to our earnings forecast for now and believe that higher programming costs arising from the Euro 2012 rights and renewal of other content would generally offset the incremental subscription and advertising revenue to be derived from one-off sporting events. While we are slightly positive on the exclusivity on the belief that rationality has prevailed in its procurement, which was coupled with the potential upside from the-cross carriage, we are still concerned over the longer term dilution in StarHub’s pay-TV franchise in view of the sticky content cost and the fact that SingTel is a formidable competitor with deep pockets.