Pay TV – BT
Greater freedom for pay TV viewers from March 2012
MDA has put out guidelines that cap early termination charges
The battle for the pay television dollar will soon intensify with a new guideline that makes it easier for dissatisfied subscribers to vote with their feet.
The Media Development Authority (MDA) has put out guidelines that cap the early termination charges (ETCs) that viewers have to pay if they cut short a pay TV contract with an operator.
From March 1, 2012, operators may charge ETCs made up only of the unfulfilled value of the subscription contract less any avoidable costs. Avoidable costs are expenses that the operator does not have to incur as a result of the contract termination. This guideline applies to contracts that are at least three months long.
A cap of 24 months will also be placed on any pay TV subscription contract so that consumers are not unreasonably tied down.
While such consumer rights are already alluded to in the Media Market Conduct Code, MDA is now spelling them out for the operators in response to consumer complaints and increasing competition.
‘In recent years, MDA has received feedback from subscribers of pay TV services that they are unfairly disadvantaged by having to pay ETCs due to unilateral changes initiated by the pay TV retailers on the channel line-up or pricing of their subscription packages,’ MDA said.
Even as disgruntled viewers clamour for redress, pay TV incumbents will have to contend with upstart competitors. The Next Generation Nationwide Broadband Network (Next Gen NBN) could mean an influx of new entrants in the pay TV field.
The response from the three main operators – StarHub, SingTel, and M1 – has been divided along the lines of who stands to gain or lose from the new guidelines.
There are more than 857,000 subscribers today, the bulk of which belong to StarHub. M1 is the newest on the pay TV scene with its 1box service which is run on a broadband network. SingTel, with its mioTV service launched in 2007, is somewhere in between.
‘SingTel’s current ETC policy already takes into account the interests of customers. We believe that there is no market failure to warrant new guidelines,’ a SingTel spokesman said.
‘Whilst we will review the new ETC guidelines . . . we are concerned that the guidelines may result in limiting consumers’ choices and deprive them of the opportunity to obtain attractive premiums.’
While StarHub said that it would ‘consider the feasibility of any new recommendations’, it suggested that alternative ETC structures be allowed to co-exist with the one laid down by the MDA in its feedback to the agency. StarHub told BT that the percentage of customers opting for early termination is ‘very small’.
M1, on the other hand, has embraced the idea of subscribers having more freedom to switch operators. ‘This will ensure that customers will not be unduly restricted or hampered should they wish to switch or terminate a pay TV service,’ it told BT.
It suggested to MDA that it go one better and allow subscribers to switch to the Next Generation Interactive Multimedia, Applications, and Services (NIMS) platform without having to pay ETCs at all for a period of time.
The NIMS platform will give consumers access to pay TV content over a broadband network.
MDA has decided against the suggestion. ‘This is something best left to commercial considerations of the pay TV retailers,’ said Toh Kai Ling, MDA’s policy director.
Operators, however, will have to toe the new line come March, or risk being ‘taken to task accordingly’, MDA said.
Pay TV – BT
Greater freedom for pay TV viewers from March 2012
MDA has put out guidelines that cap early termination charges
The battle for the pay television dollar will soon intensify with a new guideline that makes it easier for dissatisfied subscribers to vote with their feet.
The Media Development Authority (MDA) has put out guidelines that cap the early termination charges (ETCs) that viewers have to pay if they cut short a pay TV contract with an operator.
From March 1, 2012, operators may charge ETCs made up only of the unfulfilled value of the subscription contract less any avoidable costs. Avoidable costs are expenses that the operator does not have to incur as a result of the contract termination. This guideline applies to contracts that are at least three months long.
A cap of 24 months will also be placed on any pay TV subscription contract so that consumers are not unreasonably tied down.
While such consumer rights are already alluded to in the Media Market Conduct Code, MDA is now spelling them out for the operators in response to consumer complaints and increasing competition.
‘In recent years, MDA has received feedback from subscribers of pay TV services that they are unfairly disadvantaged by having to pay ETCs due to unilateral changes initiated by the pay TV retailers on the channel line-up or pricing of their subscription packages,’ MDA said.
Even as disgruntled viewers clamour for redress, pay TV incumbents will have to contend with upstart competitors. The Next Generation Nationwide Broadband Network (Next Gen NBN) could mean an influx of new entrants in the pay TV field.
The response from the three main operators – StarHub, SingTel, and M1 – has been divided along the lines of who stands to gain or lose from the new guidelines.
There are more than 857,000 subscribers today, the bulk of which belong to StarHub. M1 is the newest on the pay TV scene with its 1box service which is run on a broadband network. SingTel, with its mioTV service launched in 2007, is somewhere in between.
‘SingTel’s current ETC policy already takes into account the interests of customers. We believe that there is no market failure to warrant new guidelines,’ a SingTel spokesman said.
‘Whilst we will review the new ETC guidelines . . . we are concerned that the guidelines may result in limiting consumers’ choices and deprive them of the opportunity to obtain attractive premiums.’
While StarHub said that it would ‘consider the feasibility of any new recommendations’, it suggested that alternative ETC structures be allowed to co-exist with the one laid down by the MDA in its feedback to the agency. StarHub told BT that the percentage of customers opting for early termination is ‘very small’.
M1, on the other hand, has embraced the idea of subscribers having more freedom to switch operators. ‘This will ensure that customers will not be unduly restricted or hampered should they wish to switch or terminate a pay TV service,’ it told BT.
It suggested to MDA that it go one better and allow subscribers to switch to the Next Generation Interactive Multimedia, Applications, and Services (NIMS) platform without having to pay ETCs at all for a period of time.
The NIMS platform will give consumers access to pay TV content over a broadband network.
MDA has decided against the suggestion. ‘This is something best left to commercial considerations of the pay TV retailers,’ said Toh Kai Ling, MDA’s policy director.
Operators, however, will have to toe the new line come March, or risk being ‘taken to task accordingly’, MDA said.
StarHub – CIMB
Pay TV in the spotlight
StarHub should not be too affected by the iPhone launch, thanks to more rational subsidie sso far though the degenerating economics of pay TV is a concern. NBN take-up is slow and this should blunt competition in the residential market where StarHub is dominant.
We keep our earnings forecasts but roll over our target price to end-2012, which lifts our DCF-based target price (WACC 8.6%). Maintain OUTPERFORM on catalysts expected from slower competition in NBN, stabilising margins and a stable dividend outlook.
Not too hurt by iPhone 4S
We do not expect too severe an impact from the iPhone 4S launch given fairly rational subsidies thus far. While 4Q margins could be affected, this should only be a blip. Industry rationality is probably inspired by a rather saturated smartphone market where 65-70% of postpaid users now possess smartphones and any ARPU uplift is unlikely to be material.
Content costs show few signs of receding
We remain cautious on the economics of pay TV despite the cross-carriage regime and StarHub’s landmark non-exclusive content deal. This is because content costs show few signs of receding. Production costs continue to rise with operators paying for a wider use of content for different platforms. Most importantly, the entry of mio TV has given content owners better bargaining power.
NBN take-up still painfully slow
The take-up of NBN is unlikely to be material, as NBN remains hampered by operational issues. Squabbles persist over access to premises and who would bear the cost of access. Moreover, the installation capacity of OpenNet is limited. While that would preserve StarHub’s dominance in the residential market, it would also hamper its entry into the commercial arena, currently dominated by SingTel.
StarHub – CIMB
Pay TV in the spotlight
StarHub should not be too affected by the iPhone launch, thanks to more rational subsidie sso far though the degenerating economics of pay TV is a concern. NBN take-up is slow and this should blunt competition in the residential market where StarHub is dominant.
We keep our earnings forecasts but roll over our target price to end-2012, which lifts our DCF-based target price (WACC 8.6%). Maintain OUTPERFORM on catalysts expected from slower competition in NBN, stabilising margins and a stable dividend outlook.
Not too hurt by iPhone 4S
We do not expect too severe an impact from the iPhone 4S launch given fairly rational subsidies thus far. While 4Q margins could be affected, this should only be a blip. Industry rationality is probably inspired by a rather saturated smartphone market where 65-70% of postpaid users now possess smartphones and any ARPU uplift is unlikely to be material.
Content costs show few signs of receding
We remain cautious on the economics of pay TV despite the cross-carriage regime and StarHub’s landmark non-exclusive content deal. This is because content costs show few signs of receding. Production costs continue to rise with operators paying for a wider use of content for different platforms. Most importantly, the entry of mio TV has given content owners better bargaining power.
NBN take-up still painfully slow
The take-up of NBN is unlikely to be material, as NBN remains hampered by operational issues. Squabbles persist over access to premises and who would bear the cost of access. Moreover, the installation capacity of OpenNet is limited. While that would preserve StarHub’s dominance in the residential market, it would also hamper its entry into the commercial arena, currently dominated by SingTel.
Raffles Medical – BT
Raffles Medical posts 10.4% rise in Q3 profit
PRIVATE healthcare provider Raffles Medical Group (RMG) posted a 10.4 per cent increase in net profit to $11.79 million for the three months ended Sept 30, 2011 as both its hospital services and healthcare services divisions reported revenue growth.
In Q3 2011, revenue grew 13.5 per cent to about $69 million with its hospital services and healthcare services divisions registering growth of 14.1 per cent and 8.4 per cent, respectively. The group said that the improved performance was on the back of improved operating efficiencies, together with the recruitment of more specialist consultants, higher patient load and increased patient acuity.
Earnings per share were 2.21 cents, up from 2.04 cents in Q3 2010.
As at Sept 30, 2011, the group had a cash position of $40 million, which will help it to fund its growth plans.
During the quarter, Raffles Hospital recruited more doctors, with new staff specialists in orthopaedics and dermatology joining the hospital.
In an update on its Specialist Medical Centre at 30 Bideford Road, RMG said that the centre is slated to start operations in the first half of 2013. Planning and preparatory work for the expansion of Raffles Hospital by some additional 102,000 square feet is also underway.
Meanwhile, RMG is boosting its network of primary care clinics with two new clinics expected to open their doors in the fourth quarter – one at 112 Katong (formerly Katong Mall) and the other at Changi City Point – while Raffles Dental has also recruited more dental surgeons to support its growth.
Touching on the growing number of public and private hospitals set to open in the coming years, Dr Loo Choon Yong, RMG’s executive chairman, said: ‘Competition has never deterred us. We are, however, pleased that the government is working more closely with the private sector in providing medical care to Singaporeans. Raffles has stated clearly that we are prepared to participate actively in caring for public sector patients.’
Shares in RMG closed at $2.25 yesterday, one cent lower.