Category: StarHub
StarHub – BT
StarHub invests in US$430m submarine cable project
Venture with 3 regional telcos will link up Singapore and Japan directly
STARHUB is improving its regional connectivity further by investing in a new US$430 million undersea cable project to provide a direct, high-speed data link between Singapore and Japan.
Singapore’s second-largest operator has joined hands with three regional telcos – Japan-based NTT Communications, Philippines-based PLDT and Malaysia-based Telekom Malaysia to build the new submarine cable system.
Called the Asia Submarine-Cable Express (ASE), the 7,200 kilometre undersea project is expected to be operational by June 2012.
Besides linking Singapore to Japan, the cable network also connects to the Philippines and Hong Kong.
It will also be linked to Malaysia and potentially mainland China and other South-east Asian countries, according to a StarHub statement issued yesterday.
As with all recent submarine cable investments in the region, the ASE is designed to avoid disaster-prone areas such as the Bashi Channel located south of Taiwan.
At the same time, it will take the shortest possible route to link Singapore with Hong Kong and Japan to minimise network latency (communication lags), the operator said.
‘For businesses, especially those that deal with time-critical transactions, a network that minimises latency is vital and can make or break a deal,’ said StarHub’s chief operating officer, Tan Tong Hai.
The ASE incorporates the latest ’40G’ optical networking technologies and is capable of carrying data in excess of 15 terabits per second. It can also accommodate speed upgrades by supporting newer 100G equipment, the firm added.
This is StarHub’s second major regional submarine cable investment in the last two years. In June 2009, it partnered eight other Asian telcos to build the Asia-Pacific Gateway.
The 8,000 km Asia-Pacific Gateway system links Malaysia, Singapore, Thailand, Vietnam, Hong Kong, the Philippines, Taiwan, mainland China, Japan and Korea.
Over in Tokyo, a spokesperson for NTT Communications (NTT Comm) told The Business Times: ‘Since demand (for such communications) is growing so rapidly in Asia, we have decided to provide new capacity.’
The new network will boost the capacity of NTT Com’s Asian cable networks, paving the way for enhanced global network services that will meet the region’s increasing needs for global traffic, low network latency and reliability.
The ASE also has a capability to incorporate 100 Gbps optical technology in the future.
‘The ASE’s planned launch is further testament to NTT Com’s growing presence in the markets of Asia,’ said Akira Arima, president and CEO of NTT Com.
‘We are excited about the business opportunities we expect to realise by bridging Tokyo and other Asian economic hubs with our high-speed, high-capacity ASE cable network,’ he added.
StarHub – BT
StarHub scores Serie A rights
THE merry-go-round of soccer programming keeps on turning, with StarHub now scoring the broadcast rights to Singapore Telecommunications’ (SingTel) exiled football content, the Italian Serie A.
In a statement released yesterday, StarHub said it will start screening the 2010-to-2012 seasons of Italy’s premier football league on its cable TV platform.
A total of 118 matches for the current Serie A campaign will be offered in high definition to subscribers over the Football Channel, as well as its SuperSports and Sports HD offerings, with up to six games being shown ‘live’ per week.
The fate of Serie A, which features renowned players such as Brazilian full-back Maicon and newly crowned African player of the year Samuel Eto’o, had been in limbo since the new season kicked off on Aug 29 last year.
SingTel had acquired the rights to the Italian league from worldwide rights holder MP & Silva in 2008 in a bid to boost the sports programming on its then-fledgling mio TV platform.
However, the operator chose not to renew the contract when it expired in June 2010, two months before it started the inaugural screening of the more popular Barclays Premier League (BPL).
SingTel had paid top dollar to prise the BPL away from StarHub in 2009 for three seasons until 2013, a move which has helped to more than double its mio TV subscriber base over the last 18 months.
The demise of Serie A on local screens even prompted a few hundred fans to rally behind an online Facebook petition for its return, with StarHub eventually answering their plea.
With Serie A, Singapore’s second-largest operator now has access to the lion’s share of popular European soccer leagues, with BPL being the lone exception. The company is already showing the Spanish La Liga and the German Bundesliga.
StarHub’s contract with MP & Silva is non-exclusive, so Serie A will not trigger the government’s new cross-carriage mandate.
Unveiled in March last year by the Media Development Authority of Singapore, cross-carriage forces pay-TV operators to allow rivals to carry their exclusive content.
It seeks to do away with the prevailing practice of paying premium to hog prized programmes, and the undesirable consequence of passing on the price hike to consumers.
TELCOs – OCBC
Little impact from Telecom Code Revision
Revisions to Telecom Competition Code. The Infocomm Development Authority of Singapore (IDA) has made several revisions to the Telecom Competition Code (TCC) with effect from 21 Jan 2011. One of the key changes is a clause that prohibits telecom licensees from “cross-terminating” a consumer’s service agreement for a breach of another service agreement from an affiliated operator; this means that the telco cannot exert undue pressure on consumers to make payment of disputed charges by threatening to terminate other services (unless offered under the same service agreement). Another key addition is that telcos will no longer be allowed to charge consumers after a free trial service has ended unless they obtained express agreement from the consumer. Other changes to TCC aim to further promote competition, which include the ability for the IDA to apply a prohibition against abuse of dominant position to any licensees that it finds to have significant market power although the regulator has yet to classify them as Dominant Licensees.
More protection for consumers. Overall, these revisions are more to safeguard the country’s growing pool of mobile and broadband users. As of Oct 2010, IDA data shows that Singapore has around 7.2m mobile subscribers and boosts of a mobile penetration rate of 142.1%; the nation also has around 7.5m broadband users with a penetration rate of 183.5%. However, we believe that these revisions are unlikely to have a huge impact on the daily operations of the three telcos. For one, telcos have pointed out to the IDA during the two-year feedback process that they only terminate services as a last resort after they have exhausted all other measures to recover their monies. We think that the outlawing of the automatic “opt in” for services after the free trial has ended may result in some operational changes for the telcos; but we believe that offering a free trial is still one of the best ways for telcos to showcase their value-added services and gain new subscribers.
Maintain NEUTRAL. Separately, we note that SingTel has upped its game with its plan to start video game rental service using the new NBN network; as we articulated before, we think that telcos need value-added services to stand out from the crowd. But as it is still early days for the NBN market, given the still-low adoption rate, we do not believe that there will be a significant catalyst for SingTel and the other telcos in the near term. Maintain NEUTRAL.
TELCOs – OCBC
Little impact from Telecom Code Revision
Revisions to Telecom Competition Code. The Infocomm Development Authority of Singapore (IDA) has made several revisions to the Telecom Competition Code (TCC) with effect from 21 Jan 2011. One of the key changes is a clause that prohibits telecom licensees from “cross-terminating” a consumer’s service agreement for a breach of another service agreement from an affiliated operator; this means that the telco cannot exert undue pressure on consumers to make payment of disputed charges by threatening to terminate other services (unless offered under the same service agreement). Another key addition is that telcos will no longer be allowed to charge consumers after a free trial service has ended unless they obtained express agreement from the consumer. Other changes to TCC aim to further promote competition, which include the ability for the IDA to apply a prohibition against abuse of dominant position to any licensees that it finds to have significant market power although the regulator has yet to classify them as Dominant Licensees.
More protection for consumers. Overall, these revisions are more to safeguard the country’s growing pool of mobile and broadband users. As of Oct 2010, IDA data shows that Singapore has around 7.2m mobile subscribers and boosts of a mobile penetration rate of 142.1%; the nation also has around 7.5m broadband users with a penetration rate of 183.5%. However, we believe that these revisions are unlikely to have a huge impact on the daily operations of the three telcos. For one, telcos have pointed out to the IDA during the two-year feedback process that they only terminate services as a last resort after they have exhausted all other measures to recover their monies. We think that the outlawing of the automatic “opt in” for services after the free trial has ended may result in some operational changes for the telcos; but we believe that offering a free trial is still one of the best ways for telcos to showcase their value-added services and gain new subscribers.
Maintain NEUTRAL. Separately, we note that SingTel has upped its game with its plan to start video game rental service using the new NBN network; as we articulated before, we think that telcos need value-added services to stand out from the crowd. But as it is still early days for the NBN market, given the still-low adoption rate, we do not believe that there will be a significant catalyst for SingTel and the other telcos in the near term. Maintain NEUTRAL.
TELCOs – DBSV
Three divergent trends
• Voice, a major two-thirds slice of the mobile business, is rising for M1 but declining for StarHub.
• Non-mobile business offers opportunities for M1 but poses challenges for StarHub.
• M1 may pay more dividends on top of its regular dividend while StarHub’s commitment to regular dividends could be under pressure.
• M1 is our top sector pick. Longer term, we like SingTel for Bharti’s recovery and potential for capital management with 4Q11F results.
Voice minutes declined at StarHub but rose at M1. Despite a much higher data contribution, StarHub’s 9M10 postpaid ARPU was up 1% yoy vs M1’s 5% yoy increase. This can be attributed to more than 16% decline in voice-minutes for StarHub over the last 7 quarters. Clearly, people are spending more time surfing the web than talking over the phone, impacting players with higher voiceminutes. Previously, most StarHub customers subscribed to highend plans with more voice minutes, but are substituting voice with data now. M1’s users, on the other hand, used lower voice minutes in the past and are now upgrading to high-end plans with data in lieu of higher smartphone subsidies. M1’s launch of per second billing in 2009 may have contributed to rising voiceminutes. SingTel’s voice-minutes have been stable.
Non-mobile business is likely to be up for M1 but down for StarHub. We project StarHub’s non-mobile EBITDA (40% of group EBITDA in 2010) to decline by 5%/3% in FY11F/12F due to the entry of new players in the broadband segment and more competition from SingTel, which is aiming to add >80K pay TV subscribers p.a. over the next 3 years. For M1, we project nonmobile EBITDA (2% of group EBITDA in 2010) to grow by 50%/25% in FY11F/12F on the back of its growing SME broadband business via the National Broadband Network.
Capital management potential at M1. M1 pays out only 80% of its earnings in dividends compared to StarHub’s effective payout of over 130% for FY10F. In our view, M1 could raise its regular payout ratio to over 90% or announce a 6%-9% yield in capital management on top of its regular 6% yield. We rule out capital management at StarHub and remain skeptical about the sustainability of its 20 cents DPS. In the longer term, we like SingTel for Bharti’s recovery and potential for capital management with 4Q11F results. A strong Singapore dollar, diluting overseas contribution is the key concern for SingTel in the near term.