NBN benefits StarHub’s corporate drive. NBN opens up new opportunities in the corporate segment. Currently, StarHub’s fibre optic network covers 25% of non-residential buildings, with the remaining 75% being a virtual monopoly for SingTel. Post-NBN, StarHub will be able to raise its market share at the expense of SingTel. Another area which the latter dominates is the government sector, and this is likely to provide some growth for StarHub in the next few years.
Retail segment may not be as hard hit. Consumers may be salivating at theprospect of having high speed internet at a fraction of today’s prices with the launch of NBN, but think again. CEO Terry Clontz believes that the pricing may be as much as S$75 per residential line, only less than 10% lower than today’s prices. The high cost and low margins may deter competitors from entering the fray. He concedes that M1 will try to gain market share resulting in some near term downward pressure on margins, but beyond that, it will still be a “shoot-out” between StarHub and SingTel.
EPL up for grabs in 3Q09. StarHub will likely fight hard to retain the broadcast rights for EPL, and we estimate that StarHub’s winning bid will be 50% more than the reported US$160m it paid previously. However, Media Development Authority of Singapore (MDA) is now studying the possibility of non-exclusivity of such coveted contents, which we believe is positive for StarHub as it lowers content costs substantially and allows it to retain its customers.
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